Overall, U.S. corporate earnings are expected to rise 11 percent this year, on track to be the best profit growth since 2010. And after years of disappointments, European profits are set to climb 14 percent in 2017, Bloomberg data show. The expectations for both regions are are roughly in line with forecasts made at the beginning of the year, defying the usual pattern of analysts downgrading their estimates as the months go by.
Meanwhile, Asia is home to some of the world’s steepest rallies, led by Hong Kong stocks that are up 29 percent this year. Shares in Tokyo also hit fresh decade highs this week, bolstered by investor confidence before the local corporate earnings season and a snap election this month.
“Asia will benefit from continued improving regional growth, stable macroeconomic conditions and undemanding valuations,” said BNP Paribas Asset Management’s head of Asia Pacific equities Arthur Kwong. Any pullback in Asian equities after the year-to-date rally presents a buying opportunity for long-term investors, he wrote in a note.
Global economic growth has been robust in most places, with Europe finally joining the party and the euro-area economy on track for its best year since at least 2010. The region’s steady recovery has eclipsed worries about populism, which a few years ago would have been enough to derail any stock market rally.
“I’ve never been so optimistic about the global economy,” said Vincent Juvyns, global market strategist at J.P. Morgan Asset Management. “Ten years after the financial crisis, Europe is recovering and we have synchronized economic growth around the world. Even if we get it wrong on a country or two, it doesn’t change the big picture, which is positive for the equity markets.”
Nowhere is the shifting sentiment more pronounced than in Europe, where global investors began the year with a election calendar looming like a sword of Damocles. Ten months later, the Euro Stoxx 50 Index is up 10 percent, Italy’s FTSE MIB Index is up 17 percent and Germany’s DAX Index is up 13 percent. The rally is even stronger when priced in U.S. dollars, with the Euro Stoxx 50 up 23 percent since the start of the year.
This article was provided by Bloomberg News.