After President Donald Trump shocked global markets with his aggressive definitions earlier this year, investors moved away from the United States and went to another place – but the standards tend again.
American stocks made angry counterattacks, set new standards and erosion of the superior performance that European markets enjoyed most of this year.
S&P 500 has now increased by 13 % so far and Nasdak 17 % rises. Recently until late June, when it was the broad market index Recover his highest level everBoth increased 5 %.
Meanwhile, the DAX stock market index in Germany increased by 19 % so far this year, a decrease of 20 % in June. Other standards have gained ground, but not as much as they have American stocks. FTSE 100 in the UK increased by 13 % compared to 8 % in June. The MSCI EUROPE stock index jumped by 25 % for this year, up from 21 %.
(China is a different story. The Hang Singh Index in Hong Kong increased by 32 % this year, increasing its 21 % profit in June).
Feelings have turned greatly from Europe. Investors feel tension greater than deficit expectations in the United Kingdom and France, while economic growth remains calm. It hopes to achieve an explosion of government spending and the abolition of restrictions in the investigation so far.
“Outside Germany, it seems that investors are frustrated because of its lack of progress: there are no signs that the German government is running the spending machine,” analysts in German bank He said in a note on Wednesday. “These concerns have sparked that the government drags its feet, and may hesitate to commit itself to implementing the promised defense and infrastructure.”
While they still see “sugar rush” in the end, they are less optimistic about the long -term growth effects.
In contrast, the American markets were moved by continuing the rise on the artificial intelligence revolution, moderation in the Trump trade war, strong companies’ profits, continuous GDP growth, flexibility between consumers, tax discounts, and federal reserve return to mitigation.
American stocks will get an additional lifting from the central bank, and perhaps bridging the gap more with Europe.
On Wednesday, the Federal Reserve reduced prices for the first time since December, although many in Wall Street read a loud message at the press conference of President Jerome Powell.
In particular, he described the move as “reducing risk management”, indicating that it was not the beginning of an aggressive relief cycle. He also warned that there are no risk -free options and that it is not clear what would happen to go forward.
But the economists of Citi Research did not agree to explain the market that Powell was a larger and read a more message.
“Powell later explained that the effectiveness of today’s reduction was not one of the effects of reducing interest rates with 25 basis points, but from market price discounts-which indicates that in the case of a case, federal reserve officials will follow the markets and the Ministry of Points and reduce 75 panta this year,” City said on Wednesday.
Meanwhile, the JPMorgan stock strategy indicated on Thursday that the S&P 500 had gained an average of 26.5 % in the second year of a mitigation cycle, assuming that there is no recession, compared to an increase of 13.7 % in the first year.
Jpmorgan added that the Federal Reserve began price discounts last September, and the market has already outperformed its model profit in the first year by increasing 17.6 % at that time.
The strategists said: “Discounts in prices historically provided meaningful support for profits with a lifting of consumer spending and investment spending (CAPEX, R&D) and M&A and re -purchases.”
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