A stronger dollar. To the extent the Fed is becoming less accommodative at the same time that other central banks are maintaining very easy monetary policy, the dollar is likely to strengthen. Weaker currencies should be supportive of international equity markets, like Japan.
A positive for international markets. An earlier-than-expected rate rise from the Fed would put additional pressure on bonds, confirming my long-term preference for stocks over bonds.
However, within the equity market, not all segments look equally attractive. In particular, lots of liquidity from the ECB and the BoJ should help support international equity markets, such as Japan, which closed at a three-month high last week. As such, I continue to advocate that investors look for value within select international markets, like Japan and the Eurozone.
Sources: BlackRock, Bloomberg
Russ Koesterich, CFA, is the Chief Investment Strategist for BlackRock and iShares Chief Global Investment Strategist. He is a regular contributor to The Blog and you can find more of his posts here.
International investing involves risks, including risks related to foreign currency, limited liquidity, less government regulation and the possibility of substantial volatility due to adverse political, economic or other developments. These risks often are heightened for investments in emerging/ developing markets or in concentrations of single countries.