After plunging 34 per cent between mid-February and late March, the US sharemarket has since soared more than 50 per cent | Stephen Bartholomeusz
The US has experienced more than 170,000 coronavirus-related deaths, amid 5.5 million cases.An annualised 33 per cent slump in the US economy in the June quarter – the worst quarterly decline in US history - was hardly positive news.every nuance of the trade relationship produced a market response. Now the US is waging an economic war on China on almost every front, from tariffs to sanctions, from the escalating assault on its tech companies to the provocative fighter jet sales to Taiwan.
There’s an obvious explanation for the timing of the shifts in the sharemarket, bond market, currency relativities and commodity prices. It’s too simplistic to say that the sharemarket has been driven by the absence of alternatives. The surge in gold prices, the slide in bond yields and the decline in the dollar say that some investors have sought out alternatives.
The apparent disregard for the widening points of friction with China is, given last year’s sensitivity to the relationship, curious.The fracturing of the relationship - now almost baked in - threatens trillions of dollars of US investment and activity if China chooses to respond and US companies lose access to China’s domestic market, have to relocate their operations and global activity is slowed by the flow-on effects.
It is the FAANG+ stocks – Facebooks, Amazon, Apple, Netflix, Google, Tesla and the other large tech companies – that have powered the market’s recovery. Where the S&P 500 is up just over 50 per cent since March, the FAANG+ stocks are up almost 100 per cent.
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