Stocks Globally Soar to Record Levels
The global stock market reached a record high on August 13, 2020, as markets responded positively to a series of positive developments. The US and China's tariff agreement, strong corporate earnings, especially in technology, and expectations of monetary policy easing by the Federal Reserve have all contributed to this optimistic outlook.
The US and China's agreement to suspend the implementation of 24% tariffs while maintaining existing 10% tariffs has boosted market optimism. This decision, coupled with President Trump's order to suspend tariffs on Chinese imports for another 90 days, has bolstered investor confidence.
Investors have also reacted positively to trade negotiations and agreements, notably between the US and major partners like Japan and the European Union. These developments have reduced concerns about tariffs ahead of deadlines.
The strong performance of mega-cap tech companies has also played a significant role. Technology giants such as Nvidia and Microsoft have driven gains, supported by momentum in artificial intelligence and large market capitalizations. This has helped major indices like the S&P 500 and Nasdaq Composite reach all-time highs.
The Federal Reserve's policy expectations have also contributed to the optimistic outlook. The Fed maintained interest rates while markets anticipated future rate cuts due to signs of a slowing labor market, creating a favorable environment for equities. According to the FedWatch tool, calculated by the CME exchange based on futures, market participants now assess a 96% chance of a Fed rate cut in September, up from 57% a month ago.
Robust consumer spending and economic indicators have further supported this optimistic outlook. Data showed consumer spending growth and solid wage trends that supported economic resilience and investor confidence.
The positive sentiment was not limited to the US. The Japanese Topix index reached a new all-time high on August 13, 2020. The Nikkei index surpassed 43,000 points for the first time on the same day. The Shanghai Stock Exchange's CSI 300 index rose by 0.8%, while the European Stoxx 600 stock index rose by 0.5%. The German DAX index rose by 0.71% at 15:35 Minsk time on August 13, 2020.
The South Korean Kospi index rose by 1.1% on August 13, 2020, and the Hong Kong Hang Seng index rose by 2.6% on the same day. Inflation in the US in July 2020 rose slightly less than expected, at 2.7% year-on-year. This inflation rate, while higher than the Fed's 2% target, did not dampen investor enthusiasm.
Analysts at Deutsche Bank stated that the rise in stocks was due to increased investor confidence in the possibility of a rate cut by the Fed at the next meeting. The MSCI All Country World Equity Index hit an all-time high of 951.14 points on August 13, 2020, reflecting the global nature of this market surge.
In conclusion, a combination of positive trade developments, strong corporate earnings—especially in technology—and expectations of monetary policy easing by the Federal Reserve have contributed to record highs in global equity markets in August 2020.
Finance and investing sectors experienced considerable growth, driven by positive business developments in August 2020. The US-China tariff agreement, strong corporate earnings, particularly in the technology sector, and expectations of monetary policy easing by the Federal Reserve all contributed to this surge in market optimism.
