Continued strength in equities drove global asset prices higher in the third quarter, according to a report published Wednesday from Moody’s Investors Service.
Global asset prices continued to rise in the third quarter, the report says, with equity markets gaining in most countries, and declining bond yields boosting prices in most sovereign bond markets.
“Equity markets advanced in virtually all countries we track during the third quarter, but are still below their 10-year averages when the data is adjusted for nominal GDP growth,” says Rahul Ghosh, vice president and senior credit officer at Moody’s, in a news release. “Bond prices in advanced economies are elevated across the board, while many emerging markets are also benefitting from strong investor demand.”
Asset prices are “elevated” in advanced economies, the Moody’s report says, and that there are fewer signs of overheating in emerging markets. In particular, advanced economies’ equity markets “are looking more expensive than those in emerging markets. Elevated equity indices, accompanied by high price-to-earnings ratios, point to risks of asset price corrections in the United States, Denmark and Sweden,” the report says.
House prices relative to GDP were high in Norway, Sweden and, to a lesser extent, Austria, Germany and Australia, the report adds. And it notes that safe haven currencies, including the U.S. Dollar, Swiss Franc and Singapore dollar, remain elevated based on 10-year averages, while most emerging market currencies appear undervalued by the same metric.