Recharged bulls give stocks, commodities flying start to year

LONDON: What goes down must come up. Three months after one of the worst years on record, investors have seen world stocks and key commodity markets roar back with their best first quarter since 2012.

It may seem a little incongruous when bond markets are screaming recession warnings, but it’s all good when the world’s two biggest economies are trying to mend their differences and major central banks are going all soft and cuddly again.

The numbers are quite astonishing. The value of MSCI’s world share index has surged US$6 trillion (RM24.49 trillion).

Wall Street was up 13 per cent, Europe 12 per cent and China rose 25 per cent, which was almost everything it lost last year.

Oil has gained 30 per cent, which is its best performance in any quarter since 2009. That helped Russia’s rouble top the currency charts and copper and nickel have led metals markets to their best start since 2012.

With the global economy clearly slowing, Prime Partners chief investment officer Francois Savary, suspects stocks are likely to now pause but for fixed income that is music to the ears.

German Bunds have had their best quarter in three years, making roughly two per cent, with the yield on 10-year debt having fallen below zero per cent for the first time since 2016 a week ago.

Despite almost daily Brexit chaos, UK Gilts returns have risen 5.5 per cent, while US Treasuries have made 3.2 per cent as their yields have fallen 27 basis points.

That followed a 37 basis point fall the previous quarter, whereas in the five quarters prior to that they had consistently risen.

Currency markets have been on the turn too. The dollar index will squeeze out its fourth quarterly rise in a row, but it is largely because the euro is set for its weakest first-quarter since 2015 after a dive in euro zone growth ended a European Central Bank rate hike.

Wall Street’s rally has put the S&P 500 and Nasdaq up for their strongest quarters since 2009 and 2012 respectively. The S&P was also now only four per cent off its record high with the FANG tech stocks providing the torque.

Facebook has surged 27 per cent, Amazon 19 per cent, Google 12 per cent and Netflix has soared more than 30 per cent.

“The sell-off in December was too sharp,” said ValueWorks chief investment officer Charles Lemonides.

Silicon Valley startups have also enjoyed a frenzy. Ride-hailing service Lyft was valued at more than US$24 billion (RM97.98 billion) in its listing on Thursday.

The Renaissance IPO ETF, which invests in recently listed companies, including Spotify and software seller Okta, has also gained 31 per cent since the start of the year.

And if you think that’s good, China’s tech sector has flown up 46 per cent with Alibaba up more than 30 per cent alone.

That’s all against the backdrop of Beijing swinging back into stimulus after the economy slowed to a 28-year low.