The euphoria prevailing in the international markets since the beginning of 2024 is impressive for a period when the global economy is still moving at lower levels than the historical average.

Stock markets in America and Europe are continuously recording new highs, while last week gold and bitcoin hit all-time highs.

Some analysts see the rapid rise in stock prices as reminiscent of the dot.com bubble of the late 1990s, when Internet companies were bought lavishly, except that the investment frenzy is now for tech companies. companies that leverage artificial intelligence (AI).

The US stock index S&P 500 closed March 5 up 6.4% year-to-date and 23.5% from its October low, continuing the rally it had made in 2023, when the US economy grew at a rate above from 2% despite the increase in interest rates. The technology stock index Nasdaq also increased by 6.4% and 26.8%, respectively.

Two-thirds of the rally in Wall Street they are due to its ten largest technology companies, whose market value is equal to the value of all the stocks combined on the stock exchanges of Britain, Germany, France and Japan.

Among these ten giants are the “magnificent 7” – Apple, Microsoft, Alphabet (parent of Google), Amazon, Nvidia, Meta Platforms and Tesla, which account for 30% of the total capitalization of S&P companies 500

But also in Europe, where the economy moves between stagnation and borderline recession, the Stoxx 600 is up 3.5% since the start of the year, also marking, albeit less strongly, last year’s rally.

The view that a new bubble is forming in US stocks, shared by analysts from banks such as JPMorgan and Morgan Stanley, or Capital Economicsis not generally accepted.

There is also the counterargument from analysts, such as her Goldman Sachs, who see the current period as different from that of the 1990s or 2021, when a post-coronavirus rally was unsustainable, with prices plunging next year.

The main difference, according to this view, is that the rise in indices today is smaller than in the past and concerns a limited number of stocks, and that the rise in index-weighted stocks is “justified” by a correspondingly large increase in their profits.

It states, in particular, that US stocks have rallied 31% over the past three years against a 98% gain in the three years to the early 2000s.

Overvalued stocks now account for 24 percent of market capitalization, compared with 35 percent in the dot.com bubble, according to Goldman Sachs analyst estimates, and are far fewer in number. He said that while Nvidia’s stock – the company at the center of the AI ​​frenzy – has soared 255% in a year, its profits last year were also up 288%. In contrast, in 1999 Nortel’s stock had risen 320% but its profits had risen 94% in the same year.

Another characteristic of today’s market situation, which is rather unprecedented, is the simultaneous rise in gold prices along with that of stocks. The spot price of the precious metal rose 3.4% year-to-date, hitting a record high of $2,141 an ounce on March 5, up 16.9% from October.

Traditionally, gold is considered a safe haven for investors in times of economic uncertainty or crises and geopolitical turmoil, when there is no appetite for risk.

Now, there seems to be a coexistence of risk appetite from a large portion of investors and risk aversion from another. The rise in the price of gold likely signals concern that it may deflate the rally in stocks combined with concern over the ongoing wars in Ukraine and Gaza.

The new all-time record of bitcoin, whose price exceeded $69,000 on Tuesday, breaking the previous record from November 2021, rather confirms that there is simultaneously a risk-on tendency in the markets along with a more defensive approach. The price of bitcoin has jumped 50% in the first two months of 2024 and 132% since October, driven by the creation of 11 U.S.-based exchange-traded funds (ETFs) and an expected drop in new supply in April. of half, which happens about every four years.

Bitcoin, as a cryptocurrency, is par excellence a risky asset as its price volatility is much higher than stocks. At the same time, however, for some supporters it is considered “digital gold”, due to its limited supply and suitable as a means of storing value.