Daily Brief - Global Markets Soar

TLDR: Stock markets across the globe are experiencing unprecedented highs - among the 20 largest markets, 14 have recently hit record levels.

The MSCI ACWI Index, which tracks both developed and emerging markets, continues to climb, up 20% over the last year and 11% YTD.

Several factors are fueling this bullish trend, including expected interest rate cuts, robust economies, and strong corporate earnings. With $6 trillion in money market funds ready to be deployed, the rally shows no signs of slowing.

The brief dip in global stocks in April was quickly reversed as buyers stepped in. The S&P 500 has not seen a 2% decline in 311 days, the longest stretch since 2017-2018. Even Chinese equities, which have struggled since their peak in February 2021, are starting to recover.

Enthusiasm for artificial intelligence technology also plays a significant role, with AI chipmaker Nvidia accounting for about a quarter of the S&P 500's gains. Alongside Microsoft, Amazon, Meta, and Alphabet, these five stocks contribute approximately 53% of the index's rise.

However, the Dow’s recent milestone is notable because it is less dependent on the tech sector, indicating broader market strength. The tech sector's performance has been crucial, but it’s not the only sector doing well. The market is more diversified than it was last year.

Scenario Spotlight: What next for the MSCI ACWI?

History shows that in the past 21 episodes when the MSCI ACWI rose 20% in a year, the index on median saw further upside, particularly over a 1 month horizon.

Market Movers: Global Indexes Reaction

Here is the historical 1 month response from global indexes when MSCI ACWI rises 20% in 1 year:

1. NASDAQ Composite: 1.47%
2. S&P 500: 1.37%
3. Dow Jones Industrial Average: 1.00%
4. TSX Composite: 0.82%
5. DAX: 0.37%
6. UK FTSE 100: 0.36%
7. SENSEX: 0.30%
8. ASX 200 Australia: 0.14%
9. EURO STOXX: 0.07%
10. CAC 40: -0.01%
11. Shanghai Composite: -0.15%
12. Nikkei 225: -0.39%
13. Hang Seng: -0.95%

Earnings Spotlight: Zoom Video reports tonight

The company projects revenues of $1.125 billion, versus estimates of $1.13 billion, up 1.81% year-over-year. Non-GAAP earnings are expected to range between $1.18 and $2 per share, with the consensus steady at $1.19, reflecting 2.59% growth.

Zoom’s performance likely benefited from strong demand for products like Zoom Video Webinars, Zoom Rooms, and Zoom Phones. New solutions such as the Compliance Manager and the Swoogo hybrid events offering are expected to boost enterprise customer adoption.