Global stocks hits new record highs, surpassing previous records set in 2015, pushed by strong economic data in the U.S. and comments by the Federal Reserve on the future path of interest rates.
The FTSE All-World index, which is priced in dollars and measures more than 7,000 companies in 47 countries, closed at 293.31 points on Wednesday afternoon and pushed even higher as stocks opened on Thursday. Data showed that this was the first record high reached since the end of May 2015. The benchmark is heavily geared towards America with U.S. stocks having just over a 50 percent weighting.
Fed Chair Janet Yellen told U.S. economic lawmakers on Tuesday and Wednesday that the U.S. economy dealt with the financial crisis better than European countries and that the economy had recovered from a very deep crisis. She also hinted that there could be an interest rate hike as early as next month.
John Bilton, global head of multi-asset strategy at JPMorgan Asset Management said that rising growth and the shift towards reflation reinforces the view on stocks against bonds.
"The world economy is improving in concert for the first time in over five years based on economic surprise indices. In turn, this has driven the normalized global earnings revision ratios to its highest level over that period. This creates a favorable backdrop for stocks in general and lends support to regional equity markets despite the domestic US focus of the Trump administration," he added.