American stocks are consuming global markets

SIXTEEN years ago American stockmarkets reached their modern nadir. During the early 2000s European and emerging-market equities went on a bull run. By March 2008 America had entered recession and its financial crisis was under way. The country’s stocks accounted for less than 40 per cent of the world’s total stock market capitalisation.

Fast-forward to today and things look rather different. America’s share of the world’s stock market capitalisation has climbed pretty consistently over the past decade and a half, and sharply this year. It now stands at 61 per cent. That is astonishing dominance for a country which accounts for just over a quarter of global gross domestic product. The extent of market concentration is all the more extreme given what is happening within the American stock market itself. Just three companies – Apple, Microsoft and Nvidia – make up a tenth of the market value of global stocks.

Investors who would rather not put all their eggs in one basket are worried. Nvidia is now so large that a 13 per cent fall in the chip-designer’s share price between Jun 18 and 24, driven by not very much at all, knocked 0.5 per cent off the value of the MSCI All Country World Index, which covers both emerging and developed markets. The company’s share price later rebounded, rising by 7 per cent over the following two days.