Can stocks continue rising in a weak economy?

IT'D be fair to say that many in the stock market have been caught wrong-footed by the rally that followed the election of Donald Trump as the next US president.

Just like the result of that election, the all-time highs on Wall Street and the 156 points or 5.6 per cent gain posted by the Straits Times Index from Nov 8 to the start of this week had not been forseen by the majority.

By the same token though, it would also be fair to say that many privately wonder if the markets have over-reacted in their bid to embrace the Trump reflation story. Last week, Nobuyuki Hirano, chairman of Bank of Tokyo Mitsubishi, put it best when he commented that market moves had been "based on no tangible fact" and that markets had "moved ahead of reality'' as no one knew what Mr Trump would do.