World stocks scale new heights
Equities ride tech boom in pre-holiday rally as they take 9 days to surpass previous record peaks
World shares scaled yet another record high yesterday, propelled by a bullish growth and company earnings outlook, as well as investors’ unflagging enthusiasm for technology stocks.
Wall Street looked set for another upbeat session, with Dow Jones stock futures trading slightly higher.
And with oil prices at a two-and-a-half-year top adding to tech-driven bullishness, world stocks have taken just nine days to surpass their previous record peak.
Emerging markets too were on a roll, with the main equity benchmark touching new six-year highs and little sign of spillover from Turkey where the lira plumbed a new record low. Trading generally is starting to Investors have so far shrugged off US rate rises, President Donald Trump’s inability so far to pass promised tax reforms, Britain’s looming European Union exit and Germany’s post-election political impasse. Instead they have cited the strengthening global economy, booming trade and company earnings which are growing around 10-15 per cent.
Goldman Sachs for instance raised its earnings estimate for S&P 500 companies in 2018 and 2019, citing the expected US tax reform, above-trend global and US economic growth and slowly rising interest rates from a low base. thin ahead of the US Thanksgiving holiday, while investors will also parse minutes from the last Federal Reserve meeting, though markets are pricing an extremely gradual policy tightening path.
Ipek Ozkardeskaya, senior analyst at asset manager London Capital Group, noted markets had also shrugged off doubts that the US President Donald Trump would be able to pull off promised tax reform. “There is some optimism in world equity markets,” Ozkardeskaya said.
“[But] we can’t say the will fade soon because if rally you look at volatility measures there are signs of no anxiety in the market,” she added, referring to the VIX index — known as Wall Street’s ‘fear gauge’ which fell to around two-week lows.
A key feature of the rally has been all things tech, with the S&P technology index closing 1.2 per cent higher on Tuesday, helping all three Wall Street indexes to record highs.
That has fed through to Hong Kong’s Hang Seng Index which added around 1 per cent to vault past the 30,000-point level for the first time in 10 years.