The 'most hated bull market ever' rolls on - but trouble is ahead
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The 'most hated bull market ever' rolls on - but trouble is ahead

The US stockmarket is on its longest bull run in history after a record nine-year charge that began amid the ruin of the financial crisis.

A surge underpinned by ultra-loose monetary policy at central banks and later accelerated by the global economic recovery hitting top gear has now stretched over a record 3,453 days uninterrupted.

Since the S&P 500's low in March 2009, the US benchmark stock index has climbed over 320 per cent and seen off the threat of the eurozone debt crisis, the Chinese currency devaluation, the oil price crash and trade wars. The current run will only end when US stocks slide into bear market territory, a 20 per cent fall from the index's 52-week high.

The index pushed up to a new record high of 2,873.23 points on Tuesday ahead of the milestone. But trade war worries and climbing borrowing costs in the US loom large over Wall Street.

The record run has been dubbed the most hated bull market ever by investors. The rally has been built on a hesitant economic recovery and underpinned by emergency stimulus implemented by central banks to drag the global economy out of recession.

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Ultra low interest rates and several rounds of quantitative easing have stoked demand for stocks, helping the current rally eclipse the bull market in the run-up to the dotcom bubble.

Donald Trump's corporate tax cuts and synchronised global growth helped the stocks rally reach new heights last year with the S&P 500 soaring 19 per cent.

Tech companies have helped drive the record run.

Tech companies have helped drive the record run.

Photo: AP

The FAANG stocks - -Facebook, -Amazon, Apple, Netflix and Google -(Alphabet) - have been the standout performers driving markets in New York higher. The five Silicon Valley -titans' market value is now higher than the entire UK stock market.

The end of the economic cycle, trade war tensions and the Fed hiking rates until a part of the global economy buckles are seen as the biggest threats to the bull market's longevity.

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"The Fed is trying to get to a place where policy is tight enough that it controls building inflationary pressures but not too tight that it tips the economy into recession and that's such a difficult balancing act," explained Mike Bell, global market strategist at JPMorgan Asset Management.

"Investors need to be cognisant that we're now in the late stage of the economic cycle."

The Fed has stepped up the pace of its rate rises to stop the US economy overheating and is expected to raise borrowing costs a total of four times in 2018.

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What has driven such a long stocks rally?

A decade of ultra-low interest rates and quantitative easing - otherwise known as the printing of money - has underpinned demand for stocks. The latest leg of the rally has been driven by buoyant economic growth in the US and earnings being bolstered by tax cuts. GDP growth surged to an annualised rate of 4.1 per cent in the second quarter of 2018.

Will the record run end soon?

The rally is looking a little long in the tooth but bull markets do not die of old age. By one measure it is reckoned that markets have only been this highly valued twice before: the Wall Street Crash in 1929, and the dotcom bubble in the early 2000s.

What could end the bull run?

The trade war spat escalating, the end of cheap money as central banks push up interest rates or a "black swan" - a surprise event that sends markets crashing - could knock the record run off course. A pile of dollar debt in emerging markets, a slowdown in the Chinese economy and growing political risks in the eurozone have also been mooted as possible triggers in 2018.

Telegraph, London