World Market Cap Crosses $123 Trillion: What’s Next?

Strategists Suggest Industrial Metals, Materials, and International Stock market as Top Plays for China’s Rally

Global stock market capitalization is on track to surpass its highest level in three years, driven by the Federal Reserve’s interest rate cuts and China’s latest economic stimulus efforts.

Bank of America, citing data from GFD Finaeon, predicts global market cap will soon exceed the record $123 trillion reached in October 2021. The Vanguard Total World Stock ETF (VT), which tracks U.S. and global stocks, has already hit a new all-time high, overtaking its 2021 peak.

According to Bank of America strategists led by Michael Hartnett, markets typically stabilize when policymakers intervene—exactly what’s happening now.

China’s recent stimulus measures came on the heels of a half-point interest rate cut by the Fed, leading to a strong rally in Chinese assets. The Hang Seng Index jumped 13% this week, its best performance since 1998.

With the Fed’s rate cuts and no recession on the horizon, risky assets are gaining momentum. Investors see the policy actions from the Fed and China as sufficient to reduce recession risks.

Bank of America strategists advise that the best way to profit from China’s economic rally is by investing in industrial metals, materials, and international stocks, particularly as long as China’s 10-year yield stays above 2%. Currently, the yield stands at 2.17%.