US markets hit highs, but world stocks soar
The S&P 500's record on Wednesday is still in the shade of more robust Europe and Asia.
By Mark Trumbull | Staff writer of The Christian Science Monitorfrom the June 1, 2007 edition
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If it doesn't feel like a raging bull market, that's because it isn't – at least not yet.
Small investors aren't eagerly swapping stock tips as they were in 1999. But it's a bull market all the same, and one that's global in scope.
From Europe to Asia, stock markets have been on the rise. In many ways, US shares are playing catch-up. The Standard & Poor's 500 index hit a new all-time record on Wednesday – finally edging back over the peak it hit back in March 2000.
German shares have been rising even faster this year, up more than 15 percent since Jan. 1, as tracked by Morgan Stanley Capital International (MSCI). The S&P 500 has risen about 7 percent in that time.
In Singapore and South Korea, stocks have gained more than 15 percent. Nordic markets are up 13 percent, and the euro zone as a whole is also near the double-digit zone.
All this is a sign of a largely healthy global economy that, analysts say, is helping to fuel the fortunes of American and foreign companies alike. How far it will go is an open question, but many strategists see more room to run.
"This is the greatest global boom of all time. That's not a forecast, that's really an observation," says Ed Yardeni, an economist who provides investment strategy advice from his office in Great Neck, N.Y.
He traces the global boom to the end of the cold war and the expansion of global commerce in the 1990s. Whereas the economic boom after World War II was led by the might of American industry, the current one is worldwide in scope.
"There's the potential for these markets to continue to enjoy a strong rally," Mr. Yardeni says. "I think there is more [to come]."
Because investors have generally favored non-US markets in the past few years, he and other analysts see the prospect for large US companies to be among the best performers if the bull market plows forward.
These multinational firms – the core of the S&P 500 index – derive much of their profits and sales from the strong global economy, and arguably their share prices haven't kept up with their own success.
"Investors are just starting to pay up for those earnings" in large companies, says Joseph Quinlan, chief market strategist at Bank of America in New York.
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