Mr Johnson has long adopted a hardline approach to Brexit and threatened to pull the UK out of the EU even if no deal is reached by October 31, the deadline for the UK to leave the bloc. This adds further uncertainty to UK's financial market.
But Sheridan Bowers, head of UK and Ireland at Vontobel Asset Management takes a more neutral view.
“We believe it is too simplistic to make generalisations such as “the US is growing faster than the UK or Europe”, the stock markets where companies are listed (UK, Europe or US) do not accurately reflect where the companies are doing business and therefore the opportunities or risks for these businesses and therefore investors.”
He adds: “This is an unpredictable bottom up issue where each company has different exposures and have to adapt in different ways.”
Fed rate cut
Many in the industry warn that more than trade tensions, US equity funds will in fact be boosted by the Federal Reserve’s widely anticipated interest rate cut at a monetary policy meeting on July 30-31.
Mr Hollands says: “What should be a source of caution towards US equities at the moment are stretched valuations in parts of the market, but with Fed policy remaining very accommodative, it is quite possible that the market could continue to nudge higher in the medium term.”
The Federal Reserve is expected to cut interest rates, bowing to pressure by US president Donald Trump, by 25 basis points at the meeting.
This would mark the first US interest rate cut in almost a decade.
Mr Willis says: "The outlook for US equities will be determined by three things – the outlook for the economy and corporate earnings, the outlook for interest rates, and the electoral cycle.”
He explains that while the expectation of this rate cut has boosted US equities over recent months, there are concerns over the economic outlook and that “political noise will escalate from here into the 2020 election”.
“But if the economic data shows signs of stabilisation, then there is scope for US equities to push higher, boosted by further interest rates that are expected over the next six months,” he adds.
saloni.sardana@ft.com
