Stock Markets Are On Record-Hitting Spree Around World, Bloomberg

(MENAFN- AzerNews) From New York to London to Tokyo, if there's one similarityamong the world's equity markets it's this: record highs, saysBloomberg, Azernews reports.

Of the world's 20 largest stock markets, 14 have hit all-timehighs recently. The MSCI ACWI Index, which tracks developed andemerging markets, has been on a record-breaking run, settinganother new high on Friday. In the US, the S&P 500 and Nasdaq100 indexes hit records this week, while the Dow Jones IndustrialAverage crossed 40,000 for the first time ever. Meanwhile, thebiggest bourses in Europe, Canada, Brazil, India, Japan andAustralia are currently at or near their peaks.

Looming interest rate cuts, healthy economies and corporateearnings are driving the activity. And what's more, there areplenty of potential drivers to keep the rally rolling, such as the$6 trillion sitting in money market funds, while risks remainscarce.

“From a macro perspective, there are no red signals,” saidSalman Ahmed, global head of macro and strategic asset allocationat Fidelity International, who's overweight global equities in hismulti-asset portfolios.“The cyclical picture is staying strong,and the rally is broadening out.”

The April pullback in global stocks didn't last long, as dipbuyers consistently showed up. That helps explain why the S&P500 hasn't seen a 2% drop in 311 days, its longest streak since2017-2018. And even Chinese equities, which have been strugglingsince hitting a high in February 2021, are starting to comeback.

The S&P 500 has set 24 new all-time highs in 2024 aftergoing two years without one, as US stocks have been on a $12trillion rally since late October. One part of that is hopes for asoft landing with the economy staying strong while inflation cools,which is spurring bets the Federal Reserve will ease monetarypolicy as soon as later this year.

Another part is enthusiasm for artificial intelligencetechnology. AI chip giant Nvidia Corp. on its own is responsiblefor about one-fourth of the gains in S&P 500. And together withMicrosoft Corp., Amazon Inc., Meta Platforms Inc. andGoogle-parent Alphabet Inc., roughly 53% of the benchmark's rise iscoming from just five stocks.

So perhaps the Dow's new milestone this week was the moresignificant development, since it's less heavily weighted towardthose big tech behemoths, according to Dave Mazza, chief executiveofficer of Roundhill Investments.

“While the tech sector's strength has been incredibly importantto helping markets make high after high, it's far from the onlysector that's doing well,” he said.“While some were pointing tothe market being too concentrated last year, you can't say the samein 2024.”

European equities are also on a record-hitting spree as economicdata shows signs of bottoming amid positive surprises this year's fueling corporate profits and driving expectations formarkets to keep building on the rally.

“The expected sluggish earnings season turned out to be betterthan feared,” BNP Paribas strategists led by Georges Debbas said,noting that three-quarters of European companies met or exceededearnings expectations, with margins improving. That's fuelinganalyst estimates for future profits, lifting stocks higher.

The pan-European Stoxx 600 Index has risen in five of the lastsix months, with the divergence in monetary policy from the USlikely to be a tailwind for the region's equities. The EuropeanCentral Bank has struck a more dovish tone than the Fed over thepast few months, and bond markets are expecting the ECB to cutrates before its US counterpart for the first time ever.

While the rally had been heavily concentrated in a handful ofstocks, it's been broadening out since February, with 16 stockscontributing 50% of the yearly gains in the Stoxx 600. Novo NordiskA/S is the largest, making up 10% of the gauge's returns this year,while ASML Holding NV and SAP SE account for 7.7% and 4.3%,respectively.

The UK's FTSE 100 Index has beaten the Euro Stoxx 50 in dollarterms over the past three months, recovering much of itsunderperformance from the beginning of the year. Soaring commodityprices have been a key driver, helping one of the cheapestdeveloped equity markets in the world start to catch up to itsrivals.

The economically sensitive commodities sector has also pushed toCanada's main stocks benchmark, the S&P/TSX Composite Index, toan all-time high. Gold and copper have repeatedly set records thisyear, giving a boost to the country's massive mining sector, whichaccounts for over 12% of the index's weighting.

“Precious metal prices are closing in on decade highs set just afew weeks ago, which could keep the Canadian index supported fornow, though a reversal could spell trouble,” Bloomberg Intelligenceanalysts Gillian Wolff and Gina Martin Adams wrote in a note.

Japan's Nikkei 225 is up 16% this year, adding to a 28% gainlast year. The country lured investors and drove gains with acampaign to improve shareholder returns, a weak yen and the end ofnegative rates in Japan.

BlackRock Inc. strategists said the sliding yen could put offforeign investors. But they also think the outlook is good over thelong-term due to corporate reforms, domestic investments and wagegrowth.

India also has been on a strong run, with the benchmark S&PBSE Sensex setting records and outperforming China, thanks to thegovernment's investment pledges and an expanding economy. However,investors turned cautious in recent weeks over electionuncertainties and high valuations.

Meanwhile, Australia's S&P/ASX 200 Index hit a high on March28 after inflation data bolstered bets that rates have peaked then, expectations have shifted with a former central bankofficial predicting that cuts may only come in late 2025. Yet,Australian stocks are back to hovering near that record high.

MENAFN19052024000195011045ID1108232233