ALL-WORLD INDEX HITS NEW RECORD -- FOREIGN STOCKS CONTINUE TO RALLY -- ASIA LEADS EMERGING MARKETS HIGHER -- EUROPE ALSO LOOKS STRONG -- THAT INCLUDES IRELAND
FTSE ALL-WORLD INDEX HITS NEW RECORD... Chart 1 shows the FTSE All-World Stock Index ($FAW) trading at a new record high. The FAW includes stocks from 47 developed and emerging markets. It just recently cleared its 2015 high which resumed its major uptrend. That's a positive sign because it shows that the stock market rally is global in scope. The FAW, however, is heavily influenced by the U.S. market which is also at record highs. A better way to judge the performance of foreign stocks it to look at global stock indexes that don't include the U.S.
(click to view a live version of this chart)
Chart 1
ALL-WORLD EX US ETF REACHES TWENTY- MONTH HIGH... Foreign stocks are on the rise as well. Chart 2 shows the Vanguard FTSE All-World ex-US ETF (VEU) rising to the highest level since June 2015. It still needs to clear its 2014-2015 highs, but is heading in that direction. The VEU is a combination of foreign developed and emerging markets. Interestingly, the VEU has actually done better than the U.S. this year. The VEU is up 8.5% in 2017 versus a 6.3% gain for the S&P 500. Most of those gains have come from emerging markets which are up 13% this year. Most of those gains have come from Asian countries like China, South Korea, Taiwan, and India. Commodity exporters like Brazil and Russia have pulled back with commodity prices, but are starting to bounce again. Foreign developed stocks have also outpaced the U.S. this year by 1.3%. Emerging Markets and EAFE iShares (EEM and EFA) have both reached the highest levels since the middle of 2014.
(click to view a live version of this chart)
Chart 2
EUROPE IS ALSO RISING... Chart 3 shows the Dow Jones Europe - Ex UK Stock index rising to a twenty-month high. Since it excludes the UK (which just hit another record high), Chart 3 reflects the trend of continental Europe. And it looks strong. The index recently cleared the neckline of "head and shoulders" bottom during the first quarter, and has just risen above a falling resistance line drawn over its 2014-2015 highs. Europe is starting to play catch up to the rest of the world. It's even done better than the U.S. this year by a margin of 1.2%. Most of those gains came from Spain, Netherlands, Switzerland, and Germany. Ireland also contributed.
(click to view a live version of this chart)
Chart 3
IRISH STOCKS ARE RALLYING AS WELL... I couldn't let St. Patrick's Day pass without showing the rally in Irish stocks. Chart 4 shows the Dow Jones Ireland Stock Index nearing the highest level since late 2015. Ireland is part of the eurozone, and Irish exports are benefiting from relative weakness in the euro currency. [Guinness sales should be especially strong this weekend -- but for purely non-economic reasons]. Today's message shows that the rest of the world is starting to do better. That should attract funds into cheaper foreign stock markets, which include Ireland. That should make Irish eyes smile even more. Happy St. Patrick's Day.
