Invest
Global equity growth strong despite US drag
Equity markets around the world appear to be picking up despite US growth having “come off the boil” in recent weeks, according to Morningstar.
Global equity growth strong despite US drag
Equity markets around the world appear to be picking up despite US growth having “come off the boil” in recent weeks, according to Morningstar.
The research house said equity market gains from the recent ‘Trump trade’ – which saw shares rally and bonds sell off in the wake of US President Donald Trump’s election victory – had begun to weaken “as investors have reassessed the Trump administration’s ability to implement its economic agenda”.
US equities have stalled since around the middle of March, Morningstar said, though the earlier gains have put the S&P 500 up 4.9 per cent for the year to date.
“More positively, recent data suggest that the world economy is strengthening, which is supportive of growth assets,” Morningstar said.
The research house noted that the eurozone economy had seen an improvement and that emerging markets have “continued to outperform”, with the FTSE Eurofirst 300 index and the MSCI Emerging Markets index up 3.9 per cent and 7.8 per cent respectively for the year.
“The most recent survey data suggest that while the pace of growth in the US may have come off the boil, improved prospects elsewhere have helped the global economy to keep growing,” the research house said.
“Whatever temporary slowdown is occurring in the US has been counterbalanced by upturns elsewhere, particularly in the strengthening eurozone economy.”
A number of downside risks however remain, and Morningstar noted the International Monetary Fund had listed “protectionism, uncertainty around the US policy agenda, financial sector fragilities, potential setbacks to emerging markets, ongoing problems in the weaker eurozone countries and non-economic factors” as six primary challenges facing markets.
“Unfortunately, global equity markets appear to be putting a low probability on any of these risks materialising in a meaningful way,” Morningstar cautioned.
“Investors continue to pay high valuations by historical standards for equities, especially in the US, and the VIX [Chicago Board Options Exchange Volatility Index] measure of expected US share market volatility remains at unusually low levels, despite (for example) the unexpected US air strikes on Syria, which worsened US-Russia relations, or the current heightened tension over North Korea.”
Morningstar said the outlook was reasonably supportive of equity performance but that this remained susceptible “to reassessments of the value on offer and to risks materialising that investors do not currently seem to be prepared for”.
RELATED ARTICLES
Property
Rents Are Repricing Australia Inc: What record‑low vacancies mean for inflation, talent and strategy
Australia’s rental market has slipped into a vacancy desert, and it’s not just tenants feeling the heat. Persistently tight supply is pushing up rents, embedding services inflation and complicating ...Read more
Property
Young buyers poised for a comeback as 5% First Home Guarantee takes effect
In a move set to reshape the Australian property landscape, the government’s revamped First Home Guarantee is poised to open the doors of homeownership to a new generation of young AustraliansRead more
Property
AFG Securities waives settlement fees for first-home buyers, signalling strategic shift
In a strategic move aimed at easing the financial burden on first-home buyers, AFG Securities has announced the elimination of settlement fees on select loans, potentially saving customers up to $699Read more
Property
From trust woes to wealth: Australian agencies' secret to boosting prices
In Australia’s residential market, trust is no longer a nice-to-have—it’s a pricing variable. Persistent distrust of real estate agents is depressing vendor outcomes and inviting regulatory heat, but ...Read more
Property
Reality check for first home buyers: Affordable suburbs with 5% deposit
In a significant development for Australian first home buyers, a new property search tool from Aussie Home Loans is set to transform the way prospective homeowners approach the market. As the Federal ...Read more
Property
Trust as a performance multiplier in Australia's real estate market
In Australia’s A$10–11 trillion housing market, trust is emerging as a crucial factor that sellers and agencies can no longer afford to overlook. Traditionally viewed as a soft metric, trust is now ...Read more
Property
LJ Hooker Lake Macquarie makes a splash with Belmont buy as real estate consolidation looms
LJ Hooker Lake Macquarie’s acquisition of the Belmont office, including its rent roll, is less about shopfronts and more about balance‑sheet resilience. In a market where listings ebb and flow with ...Read more
Property
Twice the demand: the case study behind Melbourne’s first‑home buyer surge
Melbourne has quietly engineered one of Australia’s most consequential housing turnarounds, with first‑home buyer demand running at roughly double the national pace and four of the top five buyer ...Read more
Property
Rents Are Repricing Australia Inc: What record‑low vacancies mean for inflation, talent and strategy
Australia’s rental market has slipped into a vacancy desert, and it’s not just tenants feeling the heat. Persistently tight supply is pushing up rents, embedding services inflation and complicating ...Read more
Property
Young buyers poised for a comeback as 5% First Home Guarantee takes effect
In a move set to reshape the Australian property landscape, the government’s revamped First Home Guarantee is poised to open the doors of homeownership to a new generation of young AustraliansRead more
Property
AFG Securities waives settlement fees for first-home buyers, signalling strategic shift
In a strategic move aimed at easing the financial burden on first-home buyers, AFG Securities has announced the elimination of settlement fees on select loans, potentially saving customers up to $699Read more
Property
From trust woes to wealth: Australian agencies' secret to boosting prices
In Australia’s residential market, trust is no longer a nice-to-have—it’s a pricing variable. Persistent distrust of real estate agents is depressing vendor outcomes and inviting regulatory heat, but ...Read more
Property
Reality check for first home buyers: Affordable suburbs with 5% deposit
In a significant development for Australian first home buyers, a new property search tool from Aussie Home Loans is set to transform the way prospective homeowners approach the market. As the Federal ...Read more
Property
Trust as a performance multiplier in Australia's real estate market
In Australia’s A$10–11 trillion housing market, trust is emerging as a crucial factor that sellers and agencies can no longer afford to overlook. Traditionally viewed as a soft metric, trust is now ...Read more
Property
LJ Hooker Lake Macquarie makes a splash with Belmont buy as real estate consolidation looms
LJ Hooker Lake Macquarie’s acquisition of the Belmont office, including its rent roll, is less about shopfronts and more about balance‑sheet resilience. In a market where listings ebb and flow with ...Read more
Property
Twice the demand: the case study behind Melbourne’s first‑home buyer surge
Melbourne has quietly engineered one of Australia’s most consequential housing turnarounds, with first‑home buyer demand running at roughly double the national pace and four of the top five buyer ...Read more
