Equity markets are off to a strong start, especially outside the US. This is in large part thanks to the market’s belief that bad news begets good news. Bad news is met with central bank policy easing, which keeps the asset reflation carousel going round. This is happening across Europe, Japan and China.

While the Federal Reserve is readying for the lift-off of policy rates, the amount of liquidity being provided by central banks in aggregate should keep equity markets buoyant this year. Markets outside the US are doing the heavy lifting because of that synchronous central bank policy boost. Local equity market returns in Europe, Japan and China need to be looked at through that lens for context. If there was ever a moment to showcase why it is important to be a global investor, this is the year.

The US economy is past the recovery phase, while Europe and Japan are not. China is transforming the very structure of its domestic economy, and slowing in the process. In the US policy easing came at a point where interest rates had room to move lower and risk assets had valuations that could be considered low.