Stock rally marked the quarter

Global stock markets are preparing to close their best quarter in recent years. Global stock markets are preparing to close their best quarter in recent years, primarily driven by the resilience of the US economy and the artificial intelligence craze. The MSCI World Index rose by 7.7 percent this year, experiencing its best first-quarter performance since 2019. With the weakening of interest rate cut expectations, the stock-bond yield spread also opened at its highest level since 2020. Investors following the momentum trading strategy, which envisages investing in stocks that have gained momentum in the last year and selling stocks that have lost value in the same period, were also happy this quarter. The Bloomberg US momentum trading portfolio index recorded its best quarterly gain since 2002 with a return exceeding 5 percent. However, doubts about the momentum trading strategy, especially from JPMorgan, are increasingly being voiced. Stacie Mintz, Equity Strategy at PGIM Quantitative Solutions, commented, “The risk of a momentum collapse may be higher as inflation may not fall as smoothly as markets expect.”