The world’s two most closely watched stock market bellwether indices, the Standard & Poor’s 500 and Dow Jones Industrial Average, recorded a string of all-time highs in recent weeks. This is despite rising concerns over the strength of the expected global economic recovery amid a Covid-19 resurgence, which should have a dampening effect on stocks. That said, the outperformance of US stocks was not without reason, especially if we look at the flow of funds for different countries so far this year (see Chart).

Clearly, not all stock markets are performing as well as those in the US. We have previously written about how the pandemic has underscored the gaping divide between the rich and the poor. Rich, developed countries such as the US, UK and members of the European Union are able to implement huge monetary and fiscal stimulus measures to buffer the negative impact of the pandemic. They have secured most of the vaccines available and inoculated the majority of their populations, paving the way for faster economic normalisation and recoveries. Their economies are expected to rebound strongly this year, from 2020’s steep contraction.

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