Should you invest in US companies right now?

Geopolitical unrest has thrown a spanner in the works of global market recovery. Businesses looking forward to rebounding to pre-pandemic levels are facing supply chain disruptions and rising costs of energy and raw materials resulting from the Russia-Ukraine war.

The stock market has had a rough few months, and many investors are wondering what this means for their portfolios.

The Standard & Poor's 500 stock index, the benchmark index that measures the performance of 500 of the largest US stocks, is down about 17 per cent from its peak on Jan 3, 2022. This puts it firmly in correction territory (which involves a drop of more than 10 per cent) and inches closer to a bear market (a decline of more than 20 per cent).

2022 is turning out to be a challenging year for investors. The pandemic is not yet over, and the war between Russia and Ukraine is showing no signs of abating.

Businesses and consumers alike are now grappling with high inflation, caused in large part by a rise in oil prices fuelled by the war. In April, Singapore's core inflation hit 3.3 per cent, its highest level since early 2012.

The conflict has also affected other commodities. For instance, the prices of aluminium and wheat have spiked due to the Russia-Ukraine war, and a global shortage of sunflower oil has caused the prices of other vegetable oils to skyrocket. Ukraine is the largest exporter of sunflower oil in the world.

The long-term performance of US stocks is much certain

Nobody knows how the market will perform in the coming weeks and months. There is also a chance the worst of this downturn is yet to come, and stock prices could continue plummeting.

However, the market's long-term performance is much more certain. The S&P 500 has faced many corrections and crashes over the decades, and it's managed to recover from every single one of them.

In the past 20 years alone, the market has experienced everything from the dot-com bubble burst to the Great Recession to the crash in the early stages of the Covid-19 pandemic - along with countless smaller downturns along the way. Despite everything, it still earned positive average returns.

"The US market may be a consideration for Singaporeans looking to branch out because of its continued resiliency in the face of a volatile global climate," says Futu Singapore managing director Gavin Chia. Futu Singapore ("Futu SG") ("moomoo") is a subsidiary of Nasdaq-listed Futu Holdings that offers investment products and services through the online trading platform moomoo.

"Since the pandemic started, there have been significant movements in the US equity markets on the back of rising interest in investing. Some of the top US stocks being traded on the moomoo platform include Apple, Tesla, Amazon and Meta platforms."

As some parts of the world start to recover from the pandemic, companies are moving back into profitability, with many recording stronger earnings.

For instance, travel stocks, battered by the pandemic, are on the rebound as international travel picks up. Companies like Airbnb and American Airlines are preparing themselves for a spectacular comeback as the summer travel season opens.

The US stock market is projected to rise even further as companies report quarterly earnings this year that exceeded expectations despite inflationary pressures and global crises. This is seen as indicative that US stocks are capable of weathering storms - and the occasional dip - to retain their value in the long term.

In spite of increasingly trying conditions, the strong fundamentals of many US stocks could help them overcome the challenges ahead. Improving economic conditions can offer opportunities for investors within the equity space, especially companies with firm finances.

It is critical that investors ensure they have the right investments. Strong stocks from healthy companies have a better chance of surviving the market downturn. By ensuring every stock in your portfolio is a diversified long-term investment, it is far likely that these strong stocks will recover from a downturn.

Investors should maintain a long-term outlook that will make it easier to tolerate a downturn. Even if stock prices fall further, investors should keep in mind that the market has a high success rate of bouncing back.

Enjoy lifetime $0 commission* with a user-friendly platform when trading US stocks

A user-friendly trading platform is vital for US stock investing. Moomoo strives to provide a speedy, stable and easy-to-use interface and trading platform to cater to different investors' needs, especially US stock traders.

Unlike traditional brokerages, whose focus is mainly trading capabilities, moomoo also aims to educate users and build a community of traders. By combining trading tools with educational materials and a virtual community, moomoo is a one-stop investment platform where traders can not only trade, but also learn the ropes and improve their skills. Commissions and other fees and charges can directly affect profitability. Traders can reduce the cost of trading by seeking out a trading platform that charges low commissions and fees.

For those looking to gain exposure to the US market, Futu SG (moomoo) now offers a lifetime $0 commission* for US stocks.

The no-strings-attached offer enables all eligible clients to automatically receive commission-free US stock trading for life without having to fulfil any requirements.

This is good news for traders who wish to give the profitability of their US trades a boost or benefit from small market movements.

Futu SG (moomoo) also charges $0 platform fees* and $0 market data fees*, making the cost of trading even more affordable for retail investors.

Their free real-time market data and Level 2 quotes make their platform a one-stop hub for real-time quotes, financial stats and market news for the US market at no additional cost.

Furthermore, traders can trade during extended hours from 4pm to 8am (Singapore time), which enables them to trade anytime and anywhere at their convenience.

Next-generation dealer-broker Futu SG is licensed by the Monetary Authority of Singapore and is backed by world-class investors like Tencent, Sequoia Capital and Matrix Partners.

Their platform offers an intuitive trading inexperience, enhanced by a wide range of educational materials, a vibrant in-app community and timely research on individual shares. The community aspect creates countless learning opportunities for young or newbie investors, while more seasoned traders can take advantage of the actively streamlined trading experience to boost their efficiency.

Futu SG's (moomoo) account opening process takes only a few minutes and gives traders instant access to US, Singapore and Hong Kong stock markets, funds and more.

To start enjoying commission-free US stock trading, register for a Futu SG Securities account here.

*Terms and conditions apply, for more information, please visit https://j.futusg.com/00hzrn

Disclaimer: No content herein shall be considered an offer, solicitation or recommendation for the purchase or sale of securities, futures, funds or other investment products. It does not take into account your investment objectives, financial situation or particular needs. All information and data, if any, are for reference only and past performance should not be viewed as an indicator of future results. It is not a guarantee for future results. Investments in stocks, options, ETFs, funds and other instruments are subject to risks, including possible loss of the amount invested.The value of investments may fluctuate and as a result, clients may lose the value of their investment. Please consult your financial adviser as to the suitability of any investment.

This advertisement has not been reviewed by the Monetary Authority of Singapore.