The global stock rally has even more room to run, according to Credit Suisse’s top equity analysts.
Global shares should see a healthy 6 percent surge until the middle of next year as a solid macro backdrop and earnings fuel the current wave of “rational exuberance,” according to Global Equity Strategist Andrew Garthwaite.
“We have the most broad-based upturn in global growth since 2010 and macro breadth and earnings revisions are closely correlated,” wrote Garthwaite in Monday’s note. “There are clear signs of investment-led growth, and we show this is typically good for both markets and earnings.”
In the U.S. alone, the S&P 500 has added 16 percent since January while the Dow continued to notch all-time highs Tuesday morning. Meanwhile in Europe, the German DAX index is up nearly 15 percent this year and the British FTSE 100 has climbed more than 10 percent. Economists have dubbed the widespread success a synchronized global recovery.
“In Europe, despite the appreciation of the euro, PMI new orders have not rolled over, and remain consistent with nearly 3 percent GDP growth,” added Garthwaite. “The proportion of countries that are experiencing PMI new orders in excess of 52 is now the highest since the immediate recovery from the global financial crisis.”
Even central bank policy seems to be positive for equities for now. Despite announcing the rollback of its extensive portfolio this fall, the Federal Reserve’s efforts will likely not have much impact until late 2018, according to the report.