Time for stockmarket investors to look beyond the US

The S&P 500 has jumped from one high to the next, and is now up 9% this year. By contrast, international stocks remain in the doldrums.

US equity markets have continued to "party" as the final quarter of the year gets under way, says James Hughes, chief market analyst at AxiTrader. News that an amended Nafta trade deal had been agreed upon to bring Canada into the fold with the US and Mexico has provided much of the cheer.

The S&P 500 has recently jumped from one all-time high to the next, and is now up 9% this year. By contrast, international stocks remain in the doldrums. Neither eurozone nor Chinese stocks have returned to their pre- or post-crisis peaks. What's more, the MSCI World index (excluding the US) is down by nearly 3% in 2018, note Colby Smith and Robin Wigglesworth in the Financial Times.

Subscribe to MoneyWeek

Become a smarter, better informed investor with MoneyWeek.

The relative performance of the S&P 500 compared to the rest of the world is now at its most extreme level since at least 1970. But the gulf seems likely to close.

For one thing, the US Federal Reserve looks set to keep hiking interest rates, which will temper growth and make corporate debt more expensive, taking "the shine off stocks", says Hughes, while the ongoing trade spat with China may also dampen confidence.

Advertisement
Advertisement - Article continues below

Meanwhile, a huge gulf in valuations has opened up between the US and other markets. The divergence has prompted some investors to turn their backs on Wall Street in search of bargains in Japan, emerging markets and Europe.

Advertisement

Recommended

Visit/517688/the-british-equity-market-is-shrinking
Stockmarkets

The British equity market is shrinking

British startups are abandoning public stockmarkets and turning to deep-pocketed Silicon Valley venture capitalists for their investment needs.
8 Nov 2019
Visit/511212/reasons-for-investors-to-be-bearish-but-stick-with-the-stockmarket-bulls
Stockmarkets

There are lots of reasons to be bearish – but you should stick with the bulls

There are plenty of reasons to be gloomy about the stockmarkets. But the trend remains up, says Dominic Frisby. And you don’t want to bet against the …
17 Jul 2019
Visit/510684/good-news-on-jobs-scares-stockmarkets
Economy

Good news on jobs scares US stockmarkets

June brought the best monthly US jobs growth of the year, but stockmarkets were not best pleased.
11 Jul 2019
Visit/510135/trade-war-ceasefire-boosts-stockmarkets
Economy

Trade-war ceasefire boosts stockmarkets

Stockmarkets sighed with relief after the G20 summit in Japan brought a handshake between Donald Trump and Xi Jinping.
4 Jul 2019

Most Popular

Visit/investments/property/601081/three-things-matter-for-the-uk-housing-market-now-and
Property

Three things matter for the UK housing market now – and “location” isn’t one of them

The UK housing market is frozen. And when it does eventually thaw out, the traditional factors that drive prices will no longer apply. The day of reck…
1 Apr 2020
Visit/investments/property/601065/what-does-the-coronavirus-crisis-mean-for-uk-house-prices
Property

What does the coronavirus crisis mean for UK house prices?

With the whole country in lockdown, the UK property market is closed for business. John Stepek looks at what that means for UK house prices, housebuil…
27 Mar 2020
Visit/investments/commodities/energy/oil/601107/oil-shoots-higher-have-we-seen-the-bottom-for-the-big-oil
Oil

Oil shoots higher – have we seen the bottom for the big oil companies?

Just a few days ago everyone was worried about negative oil prices. Now, the market has turned upwards. John Stepek explains what’s behind the rise an…
3 Apr 2020
Visit/economy/uk-economy/601079/how-the-coronavirus-pandemic-is-killing-cash
UK Economy

How the coronavirus pandemic is killing cash

Covid-19 is making a huge difference to the way we live, work and do business. One of its less obvious effects, says Merryn Somerset Webb, is to accel…
31 Mar 2020