Market Musings 280123: More stock markets hit highs
S&P 500 hits a new all-time high, but other stock markets are also hitting the highs
Podcast:
Buy New Highs
In this podcast, Edmund Shing, Global Chief Investment Officer, discusses his convictions for buying when the markets are high.
• Is it a good time to buy stocks today?
• The context
• The 52-week strategy explained
• Why Japan?
US S&P 500 hits new all-time high, but leadership is narrow
In the last week, the S&P 500 index in the US has finally hit a new all-time high, over two years after the last all-time high level was made in December 2021 in the wake of the post-COVID reopening economic boom.
But what is interesting to note is just how narrow the leadership is in this market advance. While mid-caps and small-caps trail and remain some way from their December 2021 highs, the large-cap S&P 500 index has been clearly powered by one sector - Technology - and in particular the Magnificent 7 tech stocks.
Other sectors that have led the market higher since the end-2021 market high include OIl & Gas (although this performance largely came in 2022 rather than last year) and, within Financials, the Insurance sector.
The Magnificent 7 is perhaps nw becoming the Mag 6, following disappointing results from Tesla which have triggered a slide in its share price from over $260 in December to $183 at present.
If we are to see a rotation in stock leadership in the US stock market, it is likely to be evident through a gradual drop-off of the Magnificent 7 stocks one by one for different, stock-specific reasons over time. Perhaps Apple will be the next stock to lose momentum, given the challenges of growing iPhone sales at a time when smartphone replacement cycles seem to be ever lengthening.
Look to Europe, stil
The US is not the only region to see buoyant stock market momentum. Despite the lack of economic growth in the eurozone, the benchmark Euro STOXX 50 index has stretched to a new multi-year high this…
