For markets supposedly worried about inflation, stagflation, a shortage of computer chips, political instability, a looming tightening in monetary policy, Covid Delta, rising wages and numerous other concerns, American investors in particular are remarkably optimistic, pushing the Dow and S&P 500 to new record highs last week.
Helping this optimism were solid earnings from a growing number of companies until Snap and Intel ruined things a bit on Thursday with weaker than expected figures with Snap’s surprise the more important as it has alerted investors to possible concerns with the results this week from Facebook, Twitter and Alphabet.
No such optimism in Australia. While the ASX futures market closed with a 30-point gain on Saturday morning – pointing to a solid start this morning here – the wider market is still drifting well under all-time highs.
The ASX200 ended the week at 7,415.5, up 0.7% overall, but only up 83 points for the month so far, or just over 1%. The index is still more than 200 points under its record high.
But the momentum seems much more positive on Wall Street.
Friday saw the Dow climb nearly 74 points, or 0.2%, to 35,677.02, its first record close since August 16.
The S&P 500 edged lower by 0.1% to 4,544.90 a day after it closed at a record.
The Nasdaq Composite shed 0.8% to 15,090.20 of the back of the weaknesses in the Intel and Snap results
That left the Dow up 1%, the S&P 500 up 1.6% while the Nasdaq remained up 1.3%.
For the month so far, the S&P and Dow are up more than 5% while the Nasdaq has gained 4.4%.
Tesla shares extended their rally, rising 1.7% after hitting a new intraday high earlier in the morning.
Netflix, Ebay and Microsoft also touched new all-time highs during Friday’s trading session.
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A Chinese property slump has been a recurring investors fear in recent weeks but that has receded for the time being with the news on Friday that China’s Evergrande had made a $US83.5 million interest payment that was due to foreign bondholders, staving off a default for the property developer, for the time being.
Those media reports have not been confirmed by the company or the bondholders, so until that happens scepticism will continue.
Evergrande meanwhile has let it be known that it now sees its future in electric vehicles (as do dozens of other companies, including many who know all about making and selling them and have the money to do so).
Evergrande chairman Hui Ka Yan reportedly said on Friday the company would aim to make its new electric vehicle venture its primary business instead of property within 10 years.
Property sales will slow to about 200 billion yuan ($31.31 billion) per year by that time, compared to more than 700 billion yuan last year, he was quoted as saying by the state-controlled Securities Times.
Evergrande’s new vehicle business was started in 2019, but is yet to reveal a production model or sell a single vehicle.
But the business may not have that long – in fact it could be even shorter. Last month it warned it was still after new investors and asset sales, and that without either it might struggle to pay salaries and cover other expenses.
These media reports around Evergrande have a habit of not turning out – remember the Global Times story a month ago about the sale of 51% of the property services arm of Evergrande for $US2.6 billion?
That was supposed to generate enough money to help resume interest payments. It never happened and died last week.
The electric vehicle pivot sounds like another bad joke.
