For qualified investors

Sustained expansion

By BlackRock Investment Institute

The increasing breadth of the global economic expansion is pointing to a longer lifespan. We examine the state of the current cycle.

Kate Moore, Chief Equity Strategist, discusses the sustained expansion theme.

A broadening of steady growth beyond the US gives us confidence that the global expansion is sustainable. Roughly three-quarters of economies are on an upswing, including all of those in the Eurozone (a first in the post-crisis period). 

We believe the current cycle is progressing slowly, partly because economic growth has been restrained by an ageing population. As a result, we believe the current US economic cycle has ample room to run – likely years. Looking globally, we see abundant support for our positive view on equities. 

The momentum equity style factor has also been on a tear this year, as many US and global companies with strong price momentum have posted double-digit gains. Our expectation for a steady, sustained expansion suggests momentum will continue to have more upside potential.

You may consider: staying committed to equities, and thinking globally

A sharp earnings recovery is supporting stocks globally, favouring non-US markets. All major regions are posting earning-per-share growth of over 10% for the first time since 2005, with the exception of the post-crisis bounce. Europe is sustaining above-trend economic expansion. Japan has seen a jump in earnings expectations. And in emerging markets, improving cash flows and reasonable valuations look appealing.


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