With all the recent volatility in global stock markets, commodities and currencies due to fears of interest rates rising in the US soon. I take a look at the bull market in global stock markets to see if its coming to an end.
After falling around 55% in value during the GFC back in 2008 and 2009, the MSCI world index has been in a stellar 7 year bull market rally. The MSCI World Equity Index is a global stock market index that represents the majority of major stock indices.
The MSCI index has risen back to the 2007 pre GFC levels, as Central Banks around the world have conducted unprecedented stimulus actions by lowering interest rates and initiating Quantitative Easing or QE (printing money) to purchase Government bonds and lowering the cost of borrowing money.
The Bull Market In Stocks Is Stalling
Since the MSCI index reached the previous peak of 2007 forming a double top early last year, it has struggled to make new highs and has been heading lower.
Currently the MSCI world index is still within its 7 year bull market uptrend, however the index will find it difficult to stay at these elevated levels, as Government Bond interest rates have started to rise again despite massive amounts of QE being conducted globally by the Central Banks.
Looking at the US 10 Year Government Bond Yield chart below, you can see the downtrend for interest rates has been in place since the start of the year and has recently completed a reversal of its downtrend. If the US 10 year Government bond is to climb above the current 1.705% level the next level of resistance is around 1.98% or 0.275% high from current levels.
A similar situation is evident with the German 10 Year Government Bond yield chart below, as the downtrend has ended with a reversal that occurred in the last few weeks.
The 10 year German Government bond is sitting today at merely 0.05% interest rate, with the levels of resistance at 0.125% and 0.28% that it would need to cross before heading higher.
Will The Global Stock Market Bull Market Continue?
So while the MSCI World Equity Index is safe for now and is still within a bull market, the current reversal of trend for Government bond interest rates going higher is a big problem for global stock markets to handle right now. If the trend continues for interest rates heading higher, the 7 year bull market uptrend will most likely reverse and begin to fall.
Disclaimer: This post was for educational purposes only, and all the information contained within this post is not to be considered as advice or a recommendation of any kind. If you require advice or assistance please seek a licensed professional who can provide these services.
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I am a private trader and equities investor that loves the trading and investing world, following the markets and everything in between.