Opinion: With China’s economy almost in lockdown and the ripples spreading through the region as that shutdown disrupts global supply chains, there is an obvious disconnect between the economic impacts of the virus and the sharemarkets’ responses
The US stockmarket hit yet another record overnight and other major markets, including the Australian exchange, are within sight of their own high points. The world must be in good shape, right?
It is also far more connected and central to global economic activity. It’s a massive market for other countries goods and services, the major global centre for manufactured products and a major intermediary in global supply chains and trade.The trade war with the US and, even before that, its own attempts to deleverage and reorient its economy towards consumption had slowed its growth rate to levels last seen nearly 30 years ago.
The sharemarket might be benefiting from the same flight to safety but from investors willing to take apparently higher risks for greater returns. The distinction between real economies and financial markets seems to have been blurred and the fundamentals of earnings and assets have become less relevant than the markets’ expectations of the central bankers’ next moves.
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