Stock markets maintain rally even as global growth slows

Stock markets around the world continued to rally last week despite signs that global economic growth may be slowing.

Stocks in the United States rose for a third consecutive week last week. The Standard and Poor's 500 Index climbed 1.2 percent to close at 1,633.70, a record high.

European stocks also rose for a third consecutive week last week. The STOXX Europe 600 Index climbed 1.3 percent to 304.99, its highest level since June 2008.

Japan was the outperformer among developed stock markets last week. The Nikkei 225 rose 6.7 percent, its biggest weekly gain since December 2009, to close the week at 14,607.54, its highest level since January 2008.

Global stocks have risen amid a backdrop of weakening economic growth.

A report from Markit Economics last week based on purchasing managers surveys around the world showed that the JPMorgan global all-industry output index fell to 51.9 in April from 53.0 in March.

JPMorgan Global All-Industry Indices
	March	April
Output	53.0	51.9
New orders	52.2	51.7
Input prices	54.5	52.1
Employment	51.4	50.4

David Hensley, director of Global Economics Coordination at JPMorgan, noted that the latest purchasing managers surveys showed that global economic output rose at its “slowest pace in six months” in April.

However, investors are apparently betting on more monetary stimulus from central banks to continue boosting markets, and the latter largely delivered.

The Reserve Bank of Australia and Bank of Korea both cut interest rates last week. The RBA cut its benchmark rate by 25 basis points to 2.75 percent while the BOK cut its rate by 25 basis points to 2.5 percent.

However, the Bank of England, which already has a near-zero benchmark rate of 0.5 percent and a policy of bond-buying, left monetary policy unchanged at its monetary policy meeting last week.