The MSCI All-Country World Index of shares in 45 nations climbed 6 percent over the first six months, led by the U.S., where $1.1 trillion was added to share values. The gain is about 1.1 times the increase in global bonds and 1.8 times more than the dollar after adjusting for daily swings, data compiled by Bloomberg show. Before the adjustment, fixed income climbed 2.8 percent, the U.S. currency added 1.7 percent and the S&P GSCI Total Return index of commodities sank 7.2 percent.
In a year when billionaire Wilbur Ross predicted the U.S. is on the “verge of a recession” and former Federal Reserve Chairman Alan Greenspan said the economy “looks very sluggish,” American companies anchored a rebound that pushed the MSCI gauge up 5 percent in June. Analysts say earnings in the Standard & Poor’s 500 Index will reach a record in 2012 amid forecasts for a 2.2 percent expansion in gross domestic product, the median prediction in a survey of 70 economists by Bloomberg.
“The U.S. is the best house in the neighborhood,” Burt White, who oversees $390 billion as chief investment officer at LPL Financial Corp. in Boston, said in a June 27 telephone interview. “We believe that the recovery here is self- sustainable. If you look outside of the United States, it’s a different story. Europe is still in the middle of their crisis. As concern rises, you begin to find a safer place.”
Bonds, stocks and the dollar gained simultaneously for the first time since 2005, showing investors expect most economies to sidestep Europe’s debt crisis and grow without spurring inflation, according to John Carey, who helps oversee about $220 billion at Pioneer Investments. Economists project worldwide GDP will expand 2.3 percent this year and 2.8 percent in 2013, according to data compiled by Bloomberg.
“People may be buying different assets because of confidence that the economy will continue expanding, even if at a moderate pace,” Carey said in a telephone interview from Boston on June 29. “Supporting that is the defensive move toward assets perceived to be safer in this very volatile world. You have both of those things going on and supporting the prices of stocks, bonds and the dollar.”
Bets on global central bank action to spur growth helped lift stocks. Chairman Ben S. Bernanke signaled the U.S. Fed will probably add to its record stimulus should the economy fail to make sufficient progress in creating jobs. The Fed extended its $400 billion Operation Twist program last month and will swap $267 billion in short-term securities with longer-term debt through the end of 2012 to stimulate growth.
June’s rally came after the MSCI index tumbled 11 percent over the previous two months. The gain since the start of the year has restored $2 billion to global equity prices, led by advances of 22 percent in the Philippine Stock Exchange Index, 9.5 percent in Mexico’s IPC Index and 16 percent in Denmark’s Copenhagen 20 Index.
The S&P 500, about 14 times the size of those countries’ combined equity markets with $12 trillion in value, has increased 9.5 percent this year and posted the largest first- quarter gain since 1998. The index is projected to rise 2.6 percent to 1,398 by the end of the year, according to the average from 13 Wall Street strategists tracked by Bloomberg.
Profits in the gauge are forecast to reach a record $103.74 a share in 2012 and climb 13 percent in 2013, according to analyst estimates compiled by Bloomberg.
The Stoxx Europe 600 Index, which fell 2.6 percent in the second quarter, is up 5.7 percent for the year. The equity benchmark may advance 4.8 percent to 263 by year-end, based on forecasts from seven strategists. The MSCI Asia Pacific Index has gained 4.5 percent in 2012, with dividends.
Investors sought refuge in the U.S. dollar during the second quarter as European leaders struggled to fix a debt crisis that threatens to force Greece out of the euro and is engulfing Spain. The currency fell against all its major counterparts last week after EU officials during a summit in Brussels dropped the requirement governments get preferred- creditor status on crisis loans to Spanish lenders.
Intercontinental Exchange Inc.’s Dollar Index, which tracks the greenback against the currencies of six major U.S. trading partners, climbed 7.4 percent in the three months ending June 30. Economists’ estimate for U.S. GDP this year compares with 0.9 percent in Germany and projections for a 1.7 percent contraction in Spain, according to median estimates in surveys conducted by Bloomberg.