U.S. stock prices are outpacing those in most other regions to start 2019, but the gap is narrow and some investors are eyeing potential catalysts ...
NEW YORK: U.S. stock prices are outpacing those in most other regions to start 2019, but the gap is narrow and some investors are eyeing potential catalysts to tip the scales to the rest of the world.
"For the most part, it has been a pretty consistent trend that U.S. outperforms non U.S.," said Nathan Thooft, head of asset allocation for Manulife Asset Management in Boston."The reality is, though, it can’t go on forever." "People are willing to pay a very hefty premium for the U.S. stock market," said Lance Humphrey, a portfolio manager with USAA Asset Management."It’s our view that the fundamentals in the U.S. don’t necessarily justify the degree of that premium."
Resolution of the trade dispute between the United States and China could provide another boost, as investors have become optimistic about a deal between the world's two largest economies. Europe's STOXX has climbed 10 percent this year. A weak economic outlook - the Euro Zone economy is expected to expand 1.3 percent this year, just over half the U.S. rate - along with political uncertainty in Britain and elsewhere have pressured equities.
One factor driving U.S. outperformance this year is the heavy weight of technology stocks in the country's indexes. Nearly one-quarter of MSCI's U.S. index is tech companies, compared with 15 percent in financials. By contrast, MSCI's European Union index has a 19 percent weighting in financials and 6 percent in tech.
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