Paris (awp/afp) – Stock markets around the world continued to grow in the first half of 2024, reaching multiple records, driven by improved growth and investors’ faith in artificial intelligence, but shocks cannot be excluded in the coming months.
Records everywhere
On the markets, it is becoming difficult to count the records since the start of 2024: main indices from a multitude of countries (United States, France, Germany, United Kingdom, Japan, India) have established new highs, improved to numerous times: more than 30 times for the broader American S&P 500 index.
And for good reason: “the global economic outlook is increasingly positive,” explains Jim Reid, head of economic research at Deutsche Bank.
The American economy has shown “impressive resistance to rapid increases in interest rates” since 2022 while in Europe external demand “helps put an end to the stagnation of recent years” in particular with “Chinese growth which surprised the rise” at the start of the year, he lists.
The unemployment rate in the United States remains at a low level: 4% in May after spending more than two years below this threshold, a record since the end of the 1960s.
Investors have come to terms with the other side of this coin: the American Central Bank has still not started to lower its rates. It only plans to do so once this year, far less than market expectations at the start of the year.
Elsewhere, the European Central Bank began this move in June, as did the Swiss Central Bank (SNB), while the Bank of England could follow suit at its upcoming meetings.
Overall, the MSCI World index gained more than 10%, the American S&P 500 almost 15% and the Eurostoxx 600 almost 9%. After another very difficult start to the year, Chinese stocks have recovered somewhat.
Other assets also benefited from the trend: bitcoin set a new record, as did gold. In commodities, copper also hit an all-time high, as did cocoa, and silver has never been this expensive since 2012.
L’IA encore star
This positive trend has been encouraged by managers’ still insatiable appetite for artificial intelligence.
Symbol of this movement, Nvidia, the specialist in superchips for generative artificial intelligence, briefly became the most valuable company in the world on the stock market, at more than 3,300 billion dollars, ahead of Apple and Microsoft.
The star American companies of 2023, the “Magnificent Seven”, almost all continued to shine: over the first six months of the year the value of Nvidia more than doubled, that of Meta, Amazon and Alphabet increased between 40% and 20%. Only Tesla fell from its pedestal (-25%).
Enough to reinforce criticism of indices that are too concentrated and dependent on a single sector.
The S&P 500 index, of which the “Magnificent 7” represent more than 30%, has risen by almost 15% since the start of 2024, but if all companies had the same weighting in the index, the increase would have been much more modest, less than 5%.
“Excessive investment without sufficient profitability could affect their stock market dynamics,” as illustrated by the fall of Meta in 2022, explains Xavier Laurent, US equity manager at Ofi Invest AM. “There is also the risk of regulation by competition authorities,” he mentions.
What risks?
Other dangers also threaten financial assets. Stocks are not immune to political shocks, such as that experienced by the CAC 40 after the surprise dissolution of the French National Assembly, while the elections in the United States are looming, with their share of uncertainties.
Inflation, which has worried the markets so much for two years, has shown itself on numerous occasions in 2024 to be higher than expectations in the United States, but also in the United Kingdom.
Oil has also gained more than 10% since the start of the year and could continue to rise depending on the evolution of the conflicts in Ukraine and Gaza.
“Given the surprises of recent years, it is difficult to imagine that there will not be at least one economic shock” in the medium term, warns Mr. Reid.
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