SINGAPORE (Feb 5): There is no safe place for bears to hide in a market that is full of complacency these days. Asian equity markets marched higher alongside US and European markets in January, surpassing their 2007 highs and exhibiting strong upward momentum. There is a saying among brokers that the first three trading days are usually a good proxy for the full-year performance of the stock market. If that is the case, investors who hold long positions will laugh until they cry, as all major equity markets soared during the first three trading sessions at the beginning of 2018.  

That is just a joke. In fact, fundamentals are the true drivers behind this broad rally, and market participants expect another upbeat earnings season to confirm the continuous improvement across the globe. Wall Street is ready to celebrate another season of record earnings, with over 80% of the Standard & Poor’s 500 components beating consensus forecast so far (see Chart 1). And the market anticipates more economy-friendly policies from the White House this year, following the massive tax overhaul.

Confidence over companies’ prospects by business leaders is at the highest level since 2010, a recent PwC survey suggests. According to the survey, 75% of the 1,300 CEOs questioned believe the global economy will improve in the coming year. About 87% thought their organisations would grow and 42% were “very confident”.

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