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Global equities have maintained their bullish advance, which started back in October 2022. There have been plenty of reasons for risk assets to roll over in recent years, from wars to an embattled Chinese economy and surging interest rates, but stocks have continued to rally – plenty of pundits are licking their wounds at the start of 2024. As we often say at MM, a market that can advance on “bad news” is a strong market that should be respected:
- Since the late 2022 low, global equities have surged over 37%, with only one decent 11% pullback along the way – a good result for a market engulfed in bad news.
- However, over this time, different indices have trodden a very different path, e.g. NASDAQ +66%, European STOXX 50 +41%, ASX200 +16%, and China CSI 300 -8%.
In simple terms, the higher the tech component of the index, the better it performed, and lately, that’s been especially skewed towards AI. We are looking for this to revert through 2024, but we mustn’t fight the tape with tech still leading the charge at this stage, e.g. the NYSE FANG+ Index closed at a fresh all-time high on Friday night, helping the Dow to close up almost 400-points, also at another fresh all-time high.
Our preferred scenario is the World Equities Index also makes a new all-time high this week, only ~3% higher.
