The stunning rally on the ASX and Wall Street is starting to have some echoes of bullish frenzy in 2021. But the backdrop is very different.
, which helped the share price of Facebook’s owner, Meta, rocket 23 per cent higher and pushed the Nasdaq Composite up 3.25 per cent, caps an extraordinary start to the year for Wall Street.P 500 is up 9.3 per cent. The Euro Stoxx Index is up 10 per cent while Hong Kong’s Hang Seng has firmed 7.1 per cent. Local investors are also enjoying an 8.8 per cent rise in the ASX 200, which ground out another 0.9 per cent gain this week, withWhat’s most stunning about this rally is what’s driving it.
Many of these meme stocks also entered 2023 with short sellers betting against them heavily. As these stocks have started to rise, these short sellers have been forced to cover their bets and buy shares themselves, exacerbating the big moves. If this 2023 rally wasn’t painful already for professional and mum and dad investors who’ve been sitting on the sidelines – including the US money markets funds that have a record $US4.8 billion in their coffers – then the arrival of a FOMO element compounds the misery.
“I think what we’ve been through is a very big inflation and interest rate scare that has hit long duration assets incredibly hard, including long-term bonds. But we do believe … that the inflation is unwinding, and we think that the market is leading the Fed,” she said this week.
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