Is the great US stock boom about to end?

AMERICAN stock markets have enjoyed a stellar return in the past year. But some experts worry that the bull run that has sent US shares to record highs could come crashing down.

Savers who invested at the start of the shares boom in 2009 have pocketed spectacular returns.

In those nine years, a £10,000 investment in the S&P 500 has turned into £49,200.

However, rising interest rates, expensive US stocks and the emergence of a new technology bubble are potential threats to savers’ money.

So is it time to cash in and ditch the US? Experts are divided.

Just last month, Bank of america warned the bull run would come to an abrupt halt in the second half of 2018.

Since then, however, President Donald Trump has managed to persuade Congress to pass $1.5trillion of tax cuts, which could prolong the run, some experts say. The measures are expected to boost economic output to between 3pc and 4pc, which could act as a catalyst for the stock market to grow even further. However, at the same time, looming interest rate rises could act as a ballast for the economy, experts warn.

The Federal Reserve has increased rates twice in 2017, to 1.5pc – the highest they have been since the financial crisis – and has said there could be at least three more increases next year.

Rising interest rates usually spell bad news for stock markets, as consumers and businesses are forced to pay more to borrow money, and therefore have less money to spend.

But the increases are likely to be small, which should provide some comfort to investors.

Jason Hollands, of adviser Tilney, says: ‘ a lot of people say rising interest rates are not supportive of the stock market. But what you have got to bear in mind is rates will still be relatively low, meaning there will still be an abundant amount of cheap borrowing out there.’

Possibly a bigger threat to the stock market is the bubble forming in the technology sector. Silicon Valley giants apple, Microsoft and amazon are now the three largest companies in the world by market capitalisation.

Their rapid growth has also been a key driver of the US stock market over the past decade. But at the same time their size is a threat to the stock market if they begin to falter.

Now experts are beginning to worry that many technology stocks are priced too high compared to what they earn.

It echoes the late Nineties, when the so- called ‘dotcom’ bubble burst as investors became aware that many of the upstart internet companies they had ploughed money into were grossly overvalued.

Today IT companies account for 18pc of global stock market capitalisation.

Hollands says tech and new media stocks are ‘exhibiting some of the worrying characteristics last seen in the dotcom bubble in the late Nineties’, which wiped £3trillion off stock markets when it burst.

So if you have money in the US, what should you do?

LaITH Khalaf, of broker Hargreaves Lansdown, believes savers should not panic, as it is not a foregone conclusion that the stock market will crash when the bull run eventually ends.

He adds: ‘ None of us have crystal balls but it would probably be wise to be cautious and reassess your portfolio.’

For savers keen to pull money out of the US, he recommends looking at Europe and Japan.

Both he and Hollands tip Jupiter European, which has turned £10,000 into £21,837 in just five years.

It has big holdings in budget airline Ryanair and Novo Nordisk, the Danish healthcare giant.

If investing in Japan interests you, Khalaf tips Schroder Tokyo, which has turned £10,000 into £21,820. Some of its biggest holdings include Toyota, one of the world’s biggest car manufacturers, and Japan airlines.