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Global equities perspective: Market optimism fuels record-breaking 2017

Global equities perspective: Market optimism fuels record-breaking 2017

Rosenberg equities

Key points:

  • Another strong quarter for global equities. Technology furthered its already storied run, while the energy rally continues
  • At a factor level, quality and momentum continue to outperform
  • Earnings remain robust but sentiment is now close to record levels

A record-breaking year for global equities

The final quarter of the year was a strong one for global equities, with the MSCI All Country World Index hitting new highs and extending its run of monthly gains to 14 in a row. All major US stock markets also hit all-time highs during the quarter, buoyed by an improving economic environment and the passing of President Trump’s tax bill, which will see corporation tax cut. Both the IMF and OECD upgraded their global growth forecasts for 2017 and 2018 during the quarter.

Europe saw political developments dominate headlines over the period: Catalonia declared independence before having direct rule imposed by Spain; Germany was unable to form a government after Angela Merkel’s bloc lost seats in September elections; and the UK agreed to pay to leave the EU, although there is uncertainty around the final amount of the ‘Brexit bill’.

From a sector perspective, technology not only saw the largest returns for the quarter, but rather incredibly stood out as the top performer across all other major time-periods over the past 10 years, as shown in Exhibit 1 below. After such a run, where does the tech sector go from here?

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