bloombergImpending interest rate cuts, a healthy economy and corporate profits are driving this move. And while risks remain scarce, there are plenty of potential drivers for the rally to continue, including $6 trillion sitting in money market funds. “From a macro perspective, there are no red flags,” said Salman Ahmed, global head of macro and strategic asset allocation at Fidelity International, who is overweight global equities in his multi-asset portfolio. ing. “Business cycle conditions remain strong, and gains are widening.” April’s pullback in global stocks was short-lived, as market buying continued to emerge. This helps explain why the S&P 500 hasn’t seen a 2% decline in 311 days, the longest since 2017-2018. And Chinese stocks, which have been struggling since hitting a high in February 2021, are starting to recover.
With all this in mind, here’s how the major stock markets around the world are doing:
$12 trillion rally
With U.S. stocks up $12 trillion since late October, the S&P 500 has set 24 new all-time highs in 2024, after failing to set a single all-time high in two years. One reason for this is expectations for a soft landing in which the economy remains strong while inflation slows, spurring expectations that the Federal Reserve will ease monetary policy as early as this year. There is.
The other thing is my enthusiasm for artificial intelligence technology. AI chip giant Nvidia alone accounts for about a quarter of the rise in the S&P 500 index. Additionally, including Microsoft, Amazon.com, Meta Platforms, and Google’s parent company Alphabet, about 53 companies are profitable. % of the benchmark’s gain came from just 5 stocks.
bloombergSo perhaps this week’s new milestone for the Dow was a more significant development because it’s less heavily weighted toward these tech giants, according to Dave Mazza, chief executive officer of Round Hill Investments. It is called Noda.
“The strength of the tech sector is critical to the market rally, but it’s not the only sector that’s doing well,” he said. “Some people said last year that the market was too concentrated, but I don’t think the same can be said in 2024.”
Europe’s surprising profits
European stocks are also on a record surge as economic data shows signs of bottoming out amid this year’s positive surprises. That has boosted corporate profits and raised expectations that the market will continue to rise.
“The expected weak earnings season turned out to be better than feared,” said BNP Paribas strategists led by Georges Debas, with three-quarters of European companies meeting or beating profit forecasts. , pointed out that profit margins also improved. This has boosted analysts’ future profit expectations, pushing up the stock price.
The pan-European Stoxx 600 index has risen in five of the past six months, with monetary policy differences with the United States likely to be a tailwind for stocks in the region. The European Central Bank has been more dovish than the Fed in recent months, with bond markets expecting the ECB to cut interest rates for the first time than the U.S. central bank.
bloombergThe gains were concentrated in a few stocks, but have widened since February, with 16 stocks contributing 50% of the Stoxx 600’s annual gains. Novo Nordisk A/S was the largest, accounting for 10% of the share price increase. ASML Holding NV and SAP SE account for 7.7% and 4.3%, respectively.
commodity lift inventory
Britain’s FTSE 100 index has outperformed the euro Stoxx 50 index in dollar terms over the past three months, recovering much of the underperformance since the start of the year. One of the world’s cheapest developed stock markets is starting to catch up with rivals, driven largely by soaring commodity prices.
The economy-sensitive commodity sector also pushed Canada’s main equity benchmark, the S&P/TSX Composite Index, to record highs. Gold and copper have repeatedly set records this year, fueling the country’s large mining sector, which accounts for more than 12% of the index’s weight.
“Precious metals prices are nearing the 10-year highs they hit just a few weeks ago, which puts pressure on Canadian indexes for the foreseeable future,” Bloomberg Intelligence analysts Gillian Wolf and Gina Martin-Adams said in a note. “It may continue to be supported, but a reversal could cause problems.”
Japan is back
Japan’s Nikkei Stock Average has risen 16% this year, on top of last year’s 28% rise. Japan has attracted investors and boosted profits with a campaign calling for improved shareholder returns, a weaker yen, and an end to Japan’s negative interest rates.
BlackRock strategists said the weaker yen could scare off foreign investors. But they also believe the long-term prospects are good, with corporate reforms, domestic investment and rising wages.
bloombergIndia has also outperformed China, with the benchmark S&P BSE Sensex hitting a record, thanks to government investment pledges and an expanding economy, but investors have become cautious in recent weeks due to election uncertainty and high valuations.
Meanwhile, Australia’s S&P/ASX 200 index hit an all-time high on March 28 as inflation data confirmed the view that interest rates had peaked. Since then, expectations have changed, with former central bank officials predicting that a rate cut could only occur in the second half of 2025. Still, Australian shares are hovering near their all-time highs.
