MW Global stocks hit record highs as more countries join in the rally
By Joseph Adinolfi
Improving breadth suggests stocks will continue climbing, according to Ned Davis Research
More global stocks are joining in the rally, and that's a good thing - especially for U.S. markets.
Global stock-market breadth has improved this year, as the number of international markets near or at record highs has risen, according to a team of analysts at Ned Davis Research who published a research report on the state of the global stock market - just as the MSCI All-Country World Index was poised to finish at a fresh record high on Monday.
That index purports to track the performance of the global stock market but is heavily weighted toward the U.S. The iShares MSCI ACWI exchange-traded fund ACWI, which tracks the index, was up 0.3% in recent trading on Monday and on track to close at a record-high $112.45, according to FactSet data.
More than 60% of the index is weighted toward the U.S. market. The rest is a hodgepodge of stocks culled from 22 other developed markets and 24 emerging markets, according to the latest factsheet from MSCI. MSCI says the index represents 85% of the global equity market.
But it isn't only the U.S. that is driving the index higher. Of the 47 total markets included in the index, more than three-quarters now feature rising 200-day moving averages, accounting for 93% of the index's market capitalization, according to Ned Davis Research.
Meanwhile, about 90% of markets included in the index are trading above their 200-day moving averages, a sign of strong global breadth that was last seen in 2021.
Globally, sector performance has been robust as well, with all but three - energy, real estate and consumer discretionary - at or near new record highs.
"The index confirmation has been global in magnitude," Tim Hayes, chief global investment strategist at Ned Davis, said in a note co-authored with research analyst London Stockton.
All of this suggests that U.S. stocks have scope to climb higher, as global investors' exuberance for stocks remains undimmed, the analysts said.
Both the S&P 500 SPX and Nasdaq Composite COMP are poised to finish at record highs on Monday, according to FactSet data, with the former up 0.4% and the latter up 0.8%. The Dow Jones Industrial Average DJIA, meanwhile, was off 30 points, or 0.1%, at 39,972, on track to retreat back below the 40,000 threshold.
-Joseph Adinolfi
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(END) Dow Jones Newswires
May 20, 2024 13:26 ET (17:26 GMT)
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