Global equities keeping the faith

Описание: Monetary policy, economic resilience, and robust corporate earnings continue to underpin global equity markets, according to Kerry Craig from JP Morgan. Craig highlights that a broader and prolonged rally in equities is not unusual given current conditions, but notes a period of market consolidation may occur as investors take profits after strong performance. Central bank policy remains a vital driver, with expectations for US rate cuts to support both equities and corporate credit, while the European Central Bank and the Reserve Bank of Australia signal the end of their easing cycles. Craig sees a preference for high yield debt in the US, where default rates are low and income returns are attractive.

Turning attention to Australia, Craig points out the domestic sharemarket has lagged Wall Street, despite resilient economic growth and a soft landing achieved by the RBA. He suggests positive household income and ongoing consumption support consumer and housing-related sectors, while resources have outperformed, buoyed by rising commodity prices—particularly precious metals and gold.

Craig identifies AI and technology as strong thematic drivers behind US equities’ gains, but warns that substantial capital expenditure and elevated valuations bring risks, particularly if projected revenues do not materialise. Beyond tech, Craig sees opportunities in utilities, energy, industrials, and financials as the AI value chain develops.