Contents
In an unprecedented surge, major stock markets around the globe have reached new all-time highs. From New York to London and Tokyo, 14 of the world’s 20 largest stock markets have set record highs recently. The MSCI ACWI Index, which tracks both developed and emerging markets, has been on a record-breaking run, setting another new high last Friday. This rally, driven by robust economic conditions, corporate earnings, and potential interest rate cuts, has positioned major stock markets for continued growth, while risks remain minimal.
Major stock markets reach record highs, driven by strong economies, corporate earnings, and monetary policies. Discover the factors fueling this glob rally.
— tradingcompass.io (@TradingcompassI) May 20, 2024
to read more check the link in biohttps://t.co/jSF63gO8CE
Major Stock Markets: The U.S. Market: A $12 Trillion Rally
The United States has been a significant driver of this global surge, with the S&P 500 and Nasdaq 100 indexes hitting record levels. The Dow Jones Industrial Average crossed the 40,000 mark for the first time ever. Since late October, U.S. stocks have experienced a $12 trillion rally. This surge is fueled by hopes of a soft landing for the economy, characterized by sustained strength and cooling inflation, which may prompt the Federal Reserve to ease monetary policy later this year.
Artificial intelligence technology has been a major contributor to the U.S. market’s rise. AI chip giant Nvidia Corp. has accounted for about one-fourth of the gains in the S&P 500. Alongside Microsoft Corp., Amazon.com Inc., Meta Platforms Inc., and Alphabet Inc., these five tech giants represent roughly 53% of the benchmark’s rise. However, the Dow’s recent milestone indicates a broader rally, with strength extending beyond the tech sector.
European Markets: Earnings and Monetary Policy Boost
European equities are also experiencing a record-hitting spree, driven by positive economic data and corporate profits. The pan-European Stoxx 600 Index has risen in five of the last six months, supported by better-than-expected earnings and a dovish stance from the European Central Bank (ECB). Approximately three-quarters of European companies met or exceeded earnings expectations, leading to improved margins and higher stock prices.
The divergence in monetary policy between the ECB and the U.S. Federal Reserve has further supported European equities. The ECB’s more dovish tone and market expectations for earlier rate cuts have boosted investor confidence. Major contributors to the Stoxx 600’s gains include Novo Nordisk A/S, ASML Holding NV, and SAP SE.
Commodities and Stock Market Performance
The UK’s FTSE 100 Index has outperformed the Euro Stoxx 50 in dollar terms over the past three months, recovering from earlier underperformance. Rising commodity prices have been a key driver, helping one of the cheapest developed equity markets catch up to its peers. The economically sensitive commodities sector has also propelled Canada’s S&P/TSX Composite Index to new highs, with gold and copper repeatedly setting records this year.
The Canadian index, heavily weighted towards the mining sector, benefits significantly from soaring precious metal prices. Analysts suggest that while high metal prices could sustain the index’s performance, a reversal might pose risks.
Japan’s Market Resurgence
Japan’s Nikkei 225 has surged by 16% this year, following a 28% gain last year. Factors such as improved shareholder returns, a weak yen, and the end of negative interest rates have attracted investors. Although BlackRock Inc. strategists caution that a declining yen might deter foreign investment, they remain optimistic about Japan’s long-term outlook due to corporate reforms and domestic investments.
Emerging Markets and Other Major Stock Markets
India’s benchmark S&P BSE Sensex has set new records, driven by government investment pledges and economic growth. Despite recent investor caution due to election uncertainties and high valuations, the overall trend remains positive. Australia’s S&P/ASX 200 Index also hit a high in March, supported by favorable inflation data and expectations of stable interest rates.
Conclusion
The current rally in major stock markets reflects broad-based economic optimism and strong corporate performance across various regions. While the U.S. continues to lead with a significant $12 trillion surge, European, Asian, and other international markets are also hitting new highs. The convergence of positive economic indicators, technological advancements, and strategic monetary policies is fueling this unprecedented growth in major stock markets. As long as these favorable conditions persist, the global equity rally is poised to continue, offering promising opportunities for investors worldwide.
