The Paris CAC 40 index has been the surprise performer among the major markets so far in 2021, rising 21.1%.
That’s more than twice the return of the UK’s FTSE 100 index and even better than the US S&P 500 index which has so richly rewarded investors in recent years.
US MARKETS
The US market has continued to generate strong returns for investors. The S&P 500 index is up 19.7% year to date, closely followed by the Nasdaq’s 17.3% gain and the Dow Jones which has advanced 16%.
‘Joe Biden’s $1 trillion infrastructure plan will provide impetus, together with the fact that businesses and consumers are busy spending, all creating a tailwind for US economic growth,’ says Russ Mould, investment director at AJ Bell.
‘Equally there is also a headwind in the form of inflationary pressures which is starting to eat into corporate profit margins. For now, investors seem happy to stick with the US market in the search for investment returns.’
UK MARKETS
The UK market has been led by the FTSE 250, up 14.1% so far this year, helped by a swathe of takeover activity as private equity and overseas trade buyers start to capitalise on the value still to be found among UK stocks.
The FTSE 100 is up 8.2% which is still a decent performance when you consider historical annual returns from equities have been in the region of 7%, and there are still five months to go for UK stocks to generate further returns.
The best performing FTSE 100 stock this year has been gambling group Entain (ENT), up 70%. There is speculation that casino group MGM might have another go at buying the company.
The second-best performing FTSE 100 stock is construction equipment rental group Ashtead (AHT), which has gained 56%. The worst performer is silver and gold miner Fresnillo (FRES), down 28% since the start of January.
ASIAN MARKETS
Asia has been the laggard, with a regulatory clampdown in China putting investors off the region. Hong Kong’s Hang Seng index has fallen 4.6% so far this year, and China’s SSE index is down 1.3%.
Japan’s Nikkei 225 index has bucked the negative trend in Asia with a 2.1% gain since the start of January.
‘The IMF recently downgraded its 2021 economic forecast for Japan as it struggles to deal with Covid,’ says Mould. ‘It now expects 2.8% growth this year, the weakest of all the advanced economies.’
