Of the world’s 20 largest stock exchanges, 14 recently hit all-time highs. The MSCI ACWI index, which tracks developed and emerging markets, broke all records, hitting a new high on Friday. In the United States, the S&P 500 and Nasdaq 100 indexes hit record highs this week, while the Dow Jones Industrial Average crossed the 40,000 mark for the first time.
Meanwhile, the largest stock exchanges in Europe, Canada, Brazil, India, Japan and Australia are currently at or near their peak.
Impending interest rate cuts, healthy economies and corporate profits are boosting activity. What’s more, there are many potential drivers to sustain the recovery, such as the $6 trillion held in money market funds, while risks remain rare.
“From a macro perspective, there are no red flags,” said Salman Ahmed, global head of macro and strategic asset allocation at Fidelity International, which is overweight global stocks in its multi-portfolios. -assets. “The cyclical picture remains strong and the recovery is broadening.”
The pullback in global stocks in April did not last long as dip buyers showed up steadily. This partly explains why the S&P 500 hasn’t seen a 2% decline in 311 days, its longest streak since 2017-2018. And even Chinese stocks, struggling since their February 2021 high, are starting to rebound.
With all this in mind, here is the state of affairs in the world’s major stock markets:
$12 Trillion Rally
The S&P 500 hit 24 new all-time highs in 2024 after going two years without one, as U.S. stocks have enjoyed a $12 trillion rally since late October. That’s partly because of hopes for a soft landing, with the economy remaining strong while inflation cools, prompting bets that the Federal Reserve will ease monetary policy as early as the end of this year.
Another element is enthusiasm for artificial intelligence technology. AI chip giant Nvidia Corp. is alone responsible for about a quarter of the S&P 500’s gains. And with Microsoft Corp., Amazon.com Inc., Meta Platforms Inc. and Google parent Alphabet Inc., about 53% of the rise in The benchmark comes from just five stocks.
So perhaps the Dow’s new milestone this week was the most significant development since it is less heavily weighted in favor of these big tech giants, according to Dave Mazza, CEO of Roundhill Investments.
“While the strength of the technology sector has been extremely important in helping markets to record highs, it is far from the only sector doing well,” he said. “While some pointed out last year that the market was too concentrated, the same cannot be said in 2024.”
The profit surprise in Europe
European stocks are also in a record frenzy as economic data shows signs of bottoming out amid positive surprises this year. This fuels corporate profits and encourages markets to continue to rise.
“The expected gloominess of the earnings season turned out to be better than feared,” BNP Paribas strategists led by Georges Debbas said, noting that three-quarters of European companies met or exceeded expectations in in terms of profits, with an improvement in margins. That fuels analyst estimates for future earnings, sending shares higher.
The pan-European Stoxx 600 index has risen in five of the past six months, with monetary policy divergence with the United States likely to be a tailwind for the region’s stocks. The European Central Bank has adopted a more dovish tone than the Fed in recent months, and bond markets expect the ECB to cut rates before its U.S. counterpart for the first time.
While the rally had been heavily concentrated in a handful of stocks, it has broadened since February, with 16 stocks contributing 50% of the Stoxx 600’s annual gains. Novo Nordisk A/S is the largest, accounting for 10%. of the annual gains of the Stoxx 600. Gauge’s returns this year, while ASML Holding NV and SAP SE represent 7.7% and 4.3%, respectively.
Raw materials increase stocks
Britain’s FTSE 100 index has beaten the Euro Stoxx 50 in dollar terms over the past three months, recovering much of its underperformance from earlier in the year. Soaring commodity prices have been a key driver, helping one of the world’s cheapest developed stock markets begin to catch up with rivals.
The economically sensitive commodities sector also pushed Canada’s equity benchmark, the S&P/TSX Composite Index, to an all-time high. Gold and copper have repeatedly set records this year, giving a boost to the country’s vast mining sector, which accounts for more than 12% of the index’s weighting.
“Precious metals prices are approaching decade highs set just weeks ago, which could keep the Canadian index buoyed for now, although a reversal could spell trouble,” wrote Gillian Wolff and Gina Martin Adams, Bloomberg Intelligence analysts, in a note.
Japan is back
Japan’s Nikkei 225 index is up 16% this year, adding to a 28% gain last year. The country has attracted investors and generated gains thanks to a campaign to improve shareholder returns, a weak yen and the end of negative rates in Japan.
Strategists at BlackRock Inc. said the falling yen could deter foreign investors. But they also think the long-term outlook is good thanks to business reforms, domestic investment and wage growth.
India’s strong performance
India also saw strong gains, with the benchmark S&P BSE Sensex setting records and outperforming China, thanks to government investment pledges and an expanding economy. However, investors have become cautious in recent weeks due to election uncertainties and high valuations.
Meanwhile, Australia’s S&P/ASX 200 index hit a high on March 28 after inflation data reinforced bets that rates had peaked. Since then, expectations have changed, with one former central bank official predicting cuts may not come until late 2025. Yet Australian stocks are close to that record high again.
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