Tariff threat is persisting, but under-the-surface improvements are taking place for global equities
Though tariff concerns persist on Wall Street, some subtle movements in global equities are starting to support the bull case for markets. The global stock market is starting to show an improvement, with less concentration in the megacaps, and broader overall participation, according to Tim Hayes, chief global investment strategist at Ned Davis Research. The iShares MSCI ACWI ETF (ACWI) shows that the 10 largest holdings, including Apple, Nvidia and Microsoft, have pulled back as a percentage weight of the exchange-traded fund, while more names are starting to trend higher, a sign of healthy underlying breadth. “A growing contingent of markets has started to participate in the global uptrend,” wrote Hayes, adding that the momentum indicators show the trend is to the upside. “The percentage of markets above their 200-day moving averages has now reached its highest level since October, while the percentage of markets above their 50-day moving averages is now the highest since September,” Hayes added. In fact, the ACWI is up more than 5%, outperforming the S & P 500’s 4% advance. The iShares MSCI ACWI excluding U.S. (ACWX) has outperformed even more, up nearly 8%. ACWI YTD mountain ACWI That advance comes as investors are seeking the next catalyst to take the S & P 500 to fresh records. Even with the ongoing concerns around President Donald Trump’s trade policies, the broader index has mainly chopped around the start of the year. The index has been hovering near its record high. “The tariff and trade uncertainties haven’t gone away. And the multiple scenarios make the long-term outlook for inflation and bond yields far from clear. The level of concentration is still much greater than it has been historically,” wrote Hayes. “But it has been encouraging that the market’s megacap dependence has been receding in tandem with global breadth improvement,.” Hayes continued. “As long as this continues, bullish positioning will be supported.”
