As stock markets in the US, Japan and Europe climb, are happy days here again?

Given the state of the global economy, the recent bull runs are merely a result of investment institutions, like pension funds, having nowhere else to park their money

This is a structural problem and there are worthier causes that needed funding. The stock market has no right to celebrate

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Federal Reserve Board chairman Jerome Powell speaks during a news conference on June 14 after the US central bank paused its aggressive campaign of interest rate hikes despite “elevated” inflation, while indicating a sharp increase could be needed before the end of the year. Photo: AFP

Anthony Rowley

Anthony Rowley is a veteran journalist specialising in Asian economic and financial affairs.

Published: 9:30pm, 17 Jun 2023Updated: 9:34am, 18 Jun 2023

“Happy Days Are Here Again” was the campaign song for Franklin D. Roosevelt’s 1932 US presidential campaign, ironically just as the world was entering the Great Depression. They’re singing the same song again in stock markets from New York to Tokyo, absit omen.

Reuters recently declared that the key S&P500 US benchmark stock index had entered a “new bull market” as Japan’s Nikkei 225 index hovered near a 33-year peak. European stocks are also climbing.

The “Happy Days” song made its debut, appropriately, in a 1930 film called Chasing Rainbows. Those who believe the new bull markets on Wall Street and in Tokyo are anything other than the stuff of dreams are, likewise, chasing rainbows.

Before stock markets can begin a true recovery, one based on sound fundamentals rather than chimera, some gargantuan issues need to be resolved. By no means least among these are: the Russia-Ukraine war, US-China tensions, rival economic blocs, inflation and the threat of climate disaster.

Meanwhile, the waves of optimism washing over stock markets when much of the global economy is looking “sickly” (to quote Robert Feldman of Morgan Stanley MUFG Securities) has more to do with a tide of financial liquidity than with economic or corporate-sector prospects.

As Feldman noted during a panel discussion, even Japan’s projected gross domestic product growth for the year, at a modest 1 per cent or so, is roughly double that of other major advanced economies. The United States and Germany, especially, are looking pretty anaemic, he said, while China’s growth will be moderate.