It's the vibe
Australian markets have matched their US counterparts in reaching record highs — even though the factors behind Wall Street's remarkable rally don't apply here.
If the world seems like it's on a knife edge at the moment, then equity markets sure aren’t behaving like it. Days after a deeply troubling assassination attempt on former US president Donald Trump, many key global indices are sitting at record highs. That includes our very own ASX 200 which has spent the week above the key psychological threshold of 8,000 and today closed at 8,057.9.
Of course, investors have become accustomed to dismissing political instability in the United States, however unsettling it might seem. Markets also hit record highs in the wake of the January 6th attack on the Capitol buildings in 2021, and last year’s debt ceiling crisis passed by with barely a whimper.
On top of this, equity bulls point to a number of factors supporting the rise in stocks this year, a rally that has seen US benchmarks the Dow and S&P 500 repeatedly establish new peaks. The "Trump trade" — belief the former president’s return to the White House will lead to tax cuts and an easing of regulations — is one of them (and as Bloomberg pointed out, the momentum behind that trade predates the weekend’s events).
The artificial intelligence revolution — which has propelled Nvidia into the stratosphere and also underpinned gains for the likes of Microsoft, Alphabet and Meta — is another. Finally, and perhaps most importantly, there’s a growing belief the Federal Reserve will cut interest rates in September, which would also be good for stock prices.
