Record high on the stock market: What's behind it?

Virtually all of the prognosticators predict for the world economy, a significant slowdown. And a lot of talk of major risks by a further intensification of the trade war and a disordered Brexit. However, although all the nothing has changed, the exchanges worldwide is enormous. With the SMI in Switzerland, and the S & P 500 in the U.S., the main indices of these countries have even achieved so far in its history, unprecedented record high.

more than 14 percent on 9635 points, the Swiss Market Index (SMI), the stock market barometer of the 20 largest Swiss companies has increased since the start of the year yesterday up to the close of trading. The S & P 500, which measures the stock market performance of the largest 500 companies in the USA, has increased in the current year by almost 17 percent, at the end of the day with 2934 points listed. But other stock markets have experienced in the little more than three months of this year, strong gains: The Euro Stoxx 50 as a key Index of the Euro area increased by nearly 17 percent and the Japanese Nikkei to a little more than 11 percent. In the case of the sectors of the American technology stand out above all the values of the corresponding Index, the Nasdaq Composite has risen since the beginning of the year, almost 22 percent.

normalisation of Interest rates is postponed

The Technology stocks, however, were also caught in last year's under strong pressure. 2018 was also for other stocks, and especially for the Swiss stock market, a bad year. The SMI lost as much as 10 percent. One reason for this is the trade war that had started in the previous year, through tariff surcharges on more and more goods, especially between the United States and China, and due to threats of further aggravation significantly. The other reason, the ongoing normalisation of interest rates, particularly in the United States. Four times in a row, the Fed, the Central Bank of the country in 2018, has raised its guiding principle. For the Swiss stock market-listed companies in the United States are a more important market than Switzerland.

Higher interest rates increase the cost of investment of the company, and reduce the premium, the shares compared to the capital investment in less risky bonds. Accordingly, the expectation of a single of higher interest rates on share prices. And Vice-versa. The rate correction of the US Central Bank in January, therefore, is also the most important reason for the course fireworks on the stock markets in the United States and around the world. From their pronouncements it was clear that little more further interest rate increases are expected this year. An interest rate increase further into the future, the European Central Bank has moved. The Swiss national Bank has also made it clear that they will press their own interest rates even further into negative territory, as you raise.

The gloomier economic Outlook are the cause of the delays in the normalisation of Interest rates. For this reason, they were not a burden for equity markets, but have fired even. In addition, on the stock exchanges non-current circumstances can be traded, but expectations for the future. "With the negative news for the first half of 2019 have resigned themselves to the markets; what are the courses, where he is now, is the hope for a much better second half of the year," says Sven Bucher, head of equity research at Zurich cantonal Bank.

course driver of pessimism

Relatively pessimistic expectations, to win the companies is another reason for the price gains are also on the stock exchanges. Even from a "profit recession," there was talk before the companies began their Figures for the first quarter of to publish. Because these negative expectations in the courses has mirrored, it needs little in order to give them a boost. And so it happened: "the profits of The company in the first quarter in some markets compared to the previous year, although lower, but higher than that in the run-up was expected," says Sven Bucher.

In the recent often referred to afraid factors such as the trade war and the Brexit, the evaluation is, however, just the opposite. The investors are not very optimistic. The US government scatters again and again, evidence of an agreement with China – and of such it is on the stock markets in the meantime. A disorderly Brexit is considered to be hardly more likely. "Both in terms of the trade war, for Brexit, the prevailing view is that all have an interest in an amicable solution and that is to be expected, therefore," says chief analyst Sven Bucher.

"Everyone is too happy now"

Thus, the increase in the rates reflect a positive outcome but: "Good news increases, therefore, less potential for a further Course," says Bucher. The current optimism on the stock exchanges but also the biggest rate risk. A Fund Manager is expressed the basic feeling on the stock exchanges compared to the Wall Street Journal: "Everyone is too happy now" – "all are now happy." If all of the weigh-in in a to great security, have disappointments, have an even greater negative effect on the rates.

an indication of A very great optimism that the world's most acclaimed volatility index of US stock markets (Vix) – is considered as the fear index the stock market has halved since the beginning of the year and is now significantly below its long-term level records. The same is true for the volatility index of the Switzerland, VSMI. However, it takes little imagination to developments present both in the economic as well as in trade relations, which extend quite as cheap as the expect the stockbrokers presently.

(editing Tamedia)

Created: 24.04.2019, 13:41 PM