Source: Gelonghui
The central bank will cut interest rates, a strong economy, and corporate profits
Recently, from US stocks to European stocks to Japanese stocks, there has been a similar trend: a record high.
According to statistics, out of the 20 largest stock markets in the world, 14 recently hit record highs.
Among them, the MSCI ACWI Index, which tracks developed and emerging markets, has been running at a record high and reached a new high this Friday.
On the US stock market,$S&P 500 Index (.SPX.US)$und$NASDAQ 100 Index (.NDX.US)$It also hit a record high this week, with the Dow breaking 40,000 points for the first time in history.
Meanwhile, stock indexes in markets such as Europe, Canada, Brazil, India, Japan, and Australia have now reached or are close to new highs.
However, with such a widespread rise in global stock markets, the upcoming wave of interest rate cuts by the world's major central banks, a strong economy, and corporate profits are all important drivers.
More importantly, there are many potential drivers that can drive the stock market to continue to rise. For example, money market funds still have $6 trillion in capital, and the risk is still minimal.
Salman Ahmed, global head of macro and strategic asset allocation at Fidelity International, said: “From a macro perspective, there is no red light.”
He has increased his holdings of global stocks in his multi-asset portfolio, adding that “the cyclical situation is still strong, and gains are expanding.”
Tech stocks aren't the only ones that have soared in the US
In global stock markets, US stocks have performed very well.
The S&P 500 has reached 24 record highs this year, yet there were no record highs in the previous two years.
Since the end of October last year, the US stock market has accumulated an increase of 12 trillion US dollars.
Part of the reason for this is a bet on the Federal Reserve cutting interest rates. Investors believe that while inflation cools down, the economy remains strong and can achieve a soft landing. They are betting that the Federal Reserve will cut interest rates as early as later this year.
Another reason is the technological boom driven by AI technology. AI chip giant$NVIDIA (NVDA.US)$It itself contributed about 1/4 of the increase in the S&P 500 index, plus$Microsoft (MSFT.US)$,$Amazon (AMZN.US)$,$Meta Platforms (META.US)$und$Alphabet-A (GOOGL.US)$About 53% of the increase in the index came only from these 5 stocks.
However, Roundhill Investments' CEO Dave Mazza said,$Dow Jones Industrial Average (.DJI.US)$This week's break of 40,000 points is probably an even more important sign, as big tech giants have less weight in the index.
He said, “While trends in the technology industry are critical to help the market reach new heights, it is far from the only industry that has performed well. Although some people pointed out that the market was too concentrated last year, that's not the case this year.”
Judging from the increase in Dow constituent stocks during the year, financial stocks$American Express (AXP.US)$,$Goldman Sachs (GS.US)$,$JPMorgan (JPM.US)$etc., consumer stocks$Walmart (WMT.US)$,$Procter & Gamble (PG.US)$etc., petroleum stocks$Chevron (CVX.US)$, pharmaceutical stocks$Merck & Co (MRK.US)$The performance of the wait was also very good.
ECB dovish helps European stocks rise
In terms of European stocks, since this year's economic data showed signs of bottoming out, the European stock market also hit a record high. This has boosted the growth of corporate profits and boosted expectations that the market will continue to rise.
Georges Debbas, a strategist at BNP Paribas, and others pointed out, “The results of the weak earnings season were better than expected.”
He pointed out that 3/4 of European companies have met or exceeded profit expectations, and profit margins have improved. This further boosted analysts' expectations for future earnings and boosted the stock market.
The European STOXX 600 index has been rising for five of the past six months, and the difference between the ECB and the Federal Reserve's interest rate cut may be the driving force for the region's stock market.
Over the past few months, the ECB has been more dovish than the Federal Reserve. The bond market expects the ECB to cut interest rates before the Federal Reserve.
Although gains in the European stock market were mainly concentrated in a few individual stocks, gains have continued to expand since February, with 16 stocks contributing 50% of the annual increase in the STOXX 600 index.
Pharmaceutical stocks$Novo-Nordisk A/S (NVO.US)$The biggest contributor, accounting for 10% of the index's annual increase, chip equipment manufacturers$ASML Holding (ASML.US)$, enterprise application software provider$SAP SE (SAP.US)$They accounted for 7.7% and 4.3%, respectively.
The rise brought about by commodities
On other stock markets, the Japanese stock market$Nikkei 225 (.N225.JP)$This year's cumulative increase was 16%, and last year's increase was 28%.
Japan attracted investors and boosted the stock market by increasing shareholder returns, the weakening yen, and the central bank's move to end negative interest rates.
BlackRock's strategist said that the depreciation of the yen may discourage foreign investors. However, they also believe that the long-term prospects are good due to corporate reforms, domestic investment, and wage growth.
Furthermore, due to the government's commitment to investment and the expanding economy, the Indian stock market has also been performing strongly.$S&P SENSEX30 Index (.SENSEX.IN)$It hit a new high on April 9.
Investors have been wary in recent weeks due to election uncertainty and high valuations, and the index has fluctuated at high levels.
After inflation data supported bets that interest rates had peaked, Australia's S&P 200 index hit a new high on March 28.
Since then, since a former central bank official predicted that interest rate cuts might take place until the end of 2025, investors' expectations changed, and the stock market pulled back.
Recently, however, it has returned to near historic highs.
In addition to the stock market, the commodity market has experienced a surge since this year.
Under this influence,$UK FTSE100 Index (.FTSE.GB)$The Canadian S&P/TSX Index also performed well, and even hit a new high.
Analysts believe, “Precious metals prices are approaching the ten-year high set a few weeks ago. This may temporarily support the Canadian Index, but the pullback may cause trouble.”
Editor/jayden