The value of the world’s stock markets is about to go over their best level in three years. This is because the Federal Reserve lowered interest rates and China started to boost its economy this month.
Bank of America said that the world’s stock market will be worth more than the record $123 trillion it hit in October 2021, citing data from GFD Finaeon.
The Vanguard Total World Stock ETF VT -0.30%, which tries to track both U.S. and foreign stocks, has already surpassed its peak from 2021 and set a new record high on Thursday.
A group of strategists at Bank of America led by Michael Hartnett said, “Markets stop panicking…” This is a phrase that is often used with “when policymakers do.”
This week, China took steps to boost its economy’s money supply after the U.S. Federal Reserve cut interest rates by 0.5 percentage points.
Bank of America analysts said that the most popular trades on Wall Street right now are long gold, long technology stocks, short U.S. Treasurys, and short China. This is why Chinese assets have gone up so much this week.
This week was the best week for the Hang Seng HSI 3.55% since 1998, with a 13% rise.
The fact that the Fed cut rates without a recession happening is good for risky assets, and investors think that what the Fed and China have done is enough to stop the risk of a recession, according to analysts.
They said that industrial metals, materials, and foreign stocks are the best ways to play China as long as the stimulus keeps the 10-year yield in China at 2%. The yield on the Chinese 10-year AMBMKRM-10Y 2.165% was 2.17% on Friday.
