US Stock Market Isn’t the Only One Racing Ahead

U.S. stocks are not alone in racing ahead this year. Many markets in Europe and Asia are trading at multi-year highs, too, in part because of Wall Street’s rally.

The advances in some places have been surprising, given paltry levels of economic growth around the world. Britain’s FTSE 100, for example, enjoyed its best January since 1989 with an increase of more than six percent, even though the British economy has one foot in another recession.

Many explanations have been given for 2013’s roaring start, notably the relief over a U.S. budget agreement that avoided sending the world’s largest economy over the “fiscal cliff” of automatic tax increases and spending cuts that threatened to drag it back into recession. Several other factors are also at play: The future of the euro appears more secure than it has been for much of the past three years. There are rising hopes that Asia will give global growth another lift. The slowdown in China, the world’s No. 2 economy, seems to have leveled. And a new government in Tokyo has made revival of the moribund Japanese economy its top priority.

But nagging doubts persist, leading some to conclude that the prosperity is too good to be true.