Global stock markets are closing out August on a high as investors grow increasingly confident about the world economy and analysts expect the buying momentum to continue into September.
Major equity markets around the world are trading at, or near, the highs for the year. U.S. stocks have been a standout, with the S&P closing above 2,000 this week for the first time ever. In Europe, the Stoxx Europe 600 has rebounded from a sell-off earlier this month to trade 4 percent higher year-to-date.
Stocks in Asia also had a decent showing, with the MSCI Asia Index rising 5 percent so far this year and up 14 percent since the year-low hit in February. India is the notable out-performer, with both Sensex and Nifty broke fresh life-time records this month. Shares in China and Hong Kong are hovering at 2014 peaks, while Australia's ASX 200 is at its highest since the global financial crisis six years ago.
Against this backdrop, is the rally set to continue?
"Yes, I think so," said Mikio Kumada, global strategist at LGT Capital Partners. "The correction that needs to happen has already happened, so global markets are likely to trek higher from here."
Geopolitical tensions surrounding Iraq and Ukraine briefly roiled markets in July but shares made a turnaround in August. Kumada said European stocks have the most to gain in September.
"What goes down hardest, often comes back up the most," he said. "The European markets' performance still lag that of the U.S., which more than doubled since 2009. I believe that Europe also has to be potential to do the same, if governments and the ECB get their policy right. Of course, timings will depend a lot on political news flow."
Kumada is also upbeat about the prospects for U.S. equities, despite calls that the market is due for a significant correction. "I don't buy the bubble argument. True, some sectors of the market such as high tech are a bit overvalued, but overall, U.S stocks still look reasonably priced," he said.
Sean Darby, global head of equity strategy at Jefferies, says equity markets are looking toppish, but he does not expect any meaningful correction in September as low interest rates will keep investors chasing for more lucrative returns in stock markets.
"That's because most markets are still experiencing negative real interest rates, and under these circumstances asset prices will remain attractive and well-bid," he said.
China and Japan in vogue
Share markets in China and Japan may have headed in separate directions this year, but both could move upwards in tandem in September, analysts told CNBC.