World stocks reach new highs in over a year

2023-12-28
Summary:

Global stocks hit a one-year high, and the dollar reached a five-month low on expectations of early interest rate cuts by major central banks.

World stocks rallied to their highest level in more than a year on Wednesday, while the dollar hit a five-month low, as expectations mounted that major central banks will start to cut interest rates early next year.

US stocks appears to be in a self-perpetuating upward spiral with the S&P 500 closing near its all-time high. 90% of the stocks in the benchmark index are currently trading above their 50-day averages.


Similarly, European markets ended higher with the DAX and the CAC 40 eyeing a new historical high. The FTSE 100 eked out a small gain so far this year, lagging behind its peers.


The benchmark 10-year Treasury yield fell to a 5-month low, while the two-year Treasury yield tumbled to a low not seen in 7 months. But analysts are concerned that rates might not fall as much as expected.


BofA Global Research said on Monday that it expects the Fed to deliver four 25-bp rate cuts starting in March. It also raised the country's economic growth forecast on a quarterly average basis by 0.6% to 1.2% for next year.


Investors shed stocks at the highest weekly rate since December 2022, and recorded their largest outflow from tech stocks in 15 weeks of $700 million in the week to Wednesday, according to a report from BofA.

NASUSD

The NASDAQ 100 retreated near the 17,000 level. The tech-heavy index remains on the front foot but a bearish RSI divergence and an overbought signal suggest that a correction may occur.


Disclaimer: This material is for general information purposes only and is not intended as (and should not be considered to be) financial, investment or other advice on which reliance should be placed. No opinion given in the material constitutes a recommendation by EBC or the author that any particular investment, security, transaction or investment strategy is suitable for any specific person.

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