Stocks march to record highs

Stock markets have reached new highs, pushing the gold price down to a three-month low.

US stocks, which tend to set the tone for world markets, hit a new record this week, as the S&P 500 index climbed above 1,900.

Meanwhile, European stocks hit a new six-year high (measured by the FTSE Eurofirst index).And Japan's Nikkei perked up to its highest level since April. The good news pushed gold down to a three-month low, below $1,300 an ounce.

What the commentators said

yet more easy money

Markets also focused on the positive aspect of the European elections: Italy's reformist government held out against the populists.

Yet this good cheer could evaporate quickly a correction looks overdue.In the last few years, stocks haven't been driven by profit growth but by valuations in other words, investors have been willing to pay more for a given pound of earnings. The fundamentals need to catch up, says Stephanie Deo of UBS. Yet, first-quarter results haven't been great.

693-S-P-500

So, earnings disappointments look inevitable, especially with overoptimistic forecasts. Profits for companies in Germany's DAX index, for instance, are expected to jump by 20% in the first quarter of 2015.

Any escalation in Ukraine could also damage the rally, while analysts may also be underestimating the impact of the end of China's property bubble. Throw in alarming levels of insider sales in Europe and the US, notes Wirtschaftswoche, and the rally looks ever more precarious.

Recommended

Stockmarkets shrug off turbulence
Stockmarkets

Stockmarkets shrug off turbulence

Stockmarkets have hit their first bout of turbulence of the year, but most are clinging onto January’s gains.
4 Feb 2021
The FTSE 100 has clawed back above 7,000 – how much higher can it go?
UK stockmarkets

The FTSE 100 has clawed back above 7,000 – how much higher can it go?

The FTSE 100 index has risen to over 7,000 for the first time in over a year – it now sits just above where it was in 1999. But its era of neglect cou…
19 Apr 2021
The MoneyWeek Podcast: how to not lose money to inflation and financial repression
Investment strategy

The MoneyWeek Podcast: how to not lose money to inflation and financial repression

Merryn talks to Peter Spiller of the Capital Gearing Trust about how he navigated the last extraordinary year; what he's buying now; and how he plans …
16 Apr 2021
UK mid-cap stocks look forward to life after lockdown
UK stockmarkets

UK mid-cap stocks look forward to life after lockdown

The FTSE 250 hit an all-time high at the end of last week, as investors look to a post-lockdown recovery.
16 Apr 2021

Most Popular

“Joke” cryptocurrency dogecoin goes to the moon. What’s going on?
Bitcoin

“Joke” cryptocurrency dogecoin goes to the moon. What’s going on?

Dogecoin – a cryptocurrency created as a joke – has risen by more than 9,000% this year alone. Saloni Sardana looks at how something that began as an …
19 Apr 2021
China owns a lot more gold than it’s letting on – and here’s why
Gold

China owns a lot more gold than it’s letting on – and here’s why

In a world awash with money-printing, a currency backed by gold would have great credibility. And China – with designs on the yuan becoming the world’…
21 Apr 2021
Why investment advice could be about to get a lot cheaper
Investment strategy

Why investment advice could be about to get a lot cheaper

Vanguard, the world’s second-biggest asset manager, is launching its own cut-price financial advice service. It’s something the industry badly needs, …
20 Apr 2021