BlackRock says to get used to global stock markets hitting new highs

With stock markets around the world hitting record highs one after another, some of the world's largest asset managers, including BlackRock, State Street Global Markets, UBS Asset Management and J.P. Morgan Asset Management, expect stocks to continue rising in the second half of the year. The reason is:

One is that there are no better investment options, and one reason behind the stock market's rise is that there are still no assets more attractive than stocks. Developed market government bond yields remain subdued and credit spreads have narrowed to their lowest levels in more than a decade. Assets in U.S. money-market funds surged to a record $5.5 trillion during the pandemic, signaling a glut of cash on the sidelines.

The second is QE policy. Despite market turmoil caused by the concerning about the Taper last month, investors still believe that the Fed will not raise interest rates soon, or at least not too fast. Market participants expect central bank policy to remain accommodative, continuing to support the economy.

The third is earnings recovery. Many investors believe that earnings growth recovery is the key to driving the stock market up. Globally, earnings expectations have returned to pre-pandemic levels, with nearly 50% of S&P 500 companies raising their full-year outlooks in the past three months, which is one of the highest percentages since 2010.

The fourth is vaccine progress. Although more transmissible Covid variants are a big risk, the progress made by developed countries in vaccination has kept investors' confidence on the market.