US stocks hit record highs but investors looking elsewhere

Markets rose on Wednesday.

The S&P 500 rose 0.4 percent to another record high while the STOXX Europe 600 and the Nikkei 225 rose 0.3 percent.

US economic data on Wednesday were positive, with the Federal Reserve's latest Beige Book in particular noting that the economy “expanded modestly”.

“We can be thankful that the economy is still in a good place with economic growth a little better, a rebound in business durable equipment expenditures, and a sharp decline in joblessness which together tell the story that recession is nowhere to be seen and should not be on anyone’s radar in 2020,” MUFG chief economist Chris Rupkey said.

However, some investors think that stocks outside the US will perform better in 2020.

According to Investment Company Institute data, world stock funds brought in US$8.2 billion in investor inflows over the last two weeks while US equity funds lost more than US$10 billion in outflows.

Thomas Banks, a portfolio manager for the Federated International Small-Mid Company fund, suggested that the higher valuations for US stocks that were supported by faster growth rates could weigh on their performances as “the divergent growth rates could converge again”.