The ASX is looking at a near-60-point gain at the resumption of trading this morning after Wall Street clawed back all of Monday’s losses by Friday with another solid session.
That should be a solid follow-up to Friday’s 95.7-point, or 1.25%, gain to close at 7777.7.
Wall Street’s gains were driven by outperformance by the Seven Megacaps, as well as the likes of Berkshire Hathaway and Netflix.
That US investors climbed back into this group of megacaps only a day after telling the world the end was nigh and the Fed had to cut rates by half a percentage point instead of 0.25% and cut them now, rather than in September, underlines how rubbish their comments were – the investment moves told a very different story of continuing confidence in the idea of the Mag Seven (and a few outriders).
So will Aussie investors chase our version of the big caps – well, only a handful led by the Commonwealth Bank, which will report its 2023-24 results on Wednesday?
The CBA will have to produce some impressive figures and a big dividend rise if it is to match the 10% plus gain in the past three months and to top the market cap stakes with a value of A$221 billion at Friday’s close. CBA shares ended at $122.55.
That’s well ahead of BHP’s A$207 billion, which is down nearly 5% in the past three months. BHP shares were up 1.6% on Friday.
Despite the solid performance on Friday, the ASX 200 still ended a rough week down 2.1% after Monday’s 3.7% slump.
The difference between the performance of Wall Street and the ASX over the week, especially after Monday’s madness, tells us a lot about the confidence levels among investors in both markets.
The Reserve Bank’s foot-stamping and threats of a rate rise didn’t help local investment sentiment.