Since his election victory in early November Barack Obama has put the tools in place to oversee a new period of economic growth in the US, leading investment houses say.
Analysts at JPMorgan Asset Management (JPMAM), Aviva and Threadneedle say the new President, whi was this afternoon sworn into the Oval office, could be the man to kick-start an economy battered and bruised by the global credit crunch.
The latest figures from the US show car sales have fallen to 22.4% below last year's level, unemployment is up 7.2% to a 16-year high, and new home sales in November slumped to their lowest for 17 years.
Tom Elliott, global strategist at JPMAM, says Obama's inauguration could be "just the catalyst" the country needs.
"A change in leadership from the Bush administration, with its historic-low approval ratings, to a new Obama administration with a focus on change, has led many Americans and non-Americans alike to feel a new optimism," he says.
"This may be just the catalyst the market needs, particularly if leading economic indicators begin to bottom out during the spring."
Elliott says the Democratic Party's $825bn stimulus plan, designed to kick-start growth, is "good news" for investors in US equities. He adds Obama's successful lobbying of Congress to release the second half of the $700bn set aside by the Troubled Asset relief Programme (TARP) will have a far-reaching impact on the economy.
However, he says the market has remained volatile and investor sentiment must improve for a sustainable equity rally.
Peter Michaelis, head of the team that runs the Aviva Investors Sustainable Future fund range, says the vehicles will benefit from Obama's 'New Energy Plan for America', which include proposals for renewables and greener products.
"Obama's energy plans are a complete reversal of the unsustainable Bush Administration's policies," he says. "This support for green energy technologies is essential in the move towards a more sustainable future and will support many of our investments."
Cormac Weldon, head of US equities at Threedneedle, believes there are likely to be further measures after TARP, but only in return for a greater willingness among financial institutions to resume lending.
Weldon says that, while a falling mortgage rate has brought welcome relief to the housing industry in recent weeks, there remains a "significant overhang" in the market due to the number of foreclosures on houses where there is negative equity.
He anticipates further action to slow the rate of foreclosures which negatively impacts on house prices. "[This] will give the US economy the chance to stabilise over the next few quarters before resuming moderate economic growth next year," he says.IFAonline
Succeeding co-founder Simon Rogerson
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