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.
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.
Subscribe to MoneyWeek
Subscribe to MoneyWeek today and get your first six magazine issues absolutely FREE
Sign up to Money Morning
Don't miss the latest investment and personal finances news, market analysis, plus money-saving tips with our free twice-daily newsletter
Don't miss the latest investment and personal finances news, market analysis, plus money-saving tips with our free twice-daily newsletter
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.
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.
-
What happens if you can’t pay your tax bill, and what is "Time to Pay"?Millions are due to file their tax return this Friday as the self-assessment deadline closes. Though the nightmare is not over until you pay the taxman what you owe - or face a penalty. But what happens if you can't afford to pay HMRC your tax bill, and what is "Time to Pay"?
-
What does Rachel Reeves’s plan for growth mean for UK investors?Rachel Reeves says she is going “further and faster” to kickstart the UK economy, but investors are unlikely to be persuaded
