Angela Weiss Agence France-Presse
The major indices finished the first session of the month of August up.
Wall Street primer August as it has done since the depths of the pandemic, with an upward momentum under the impetus of the dominant giants of the tech “. The major indices finished the first session of the month of August up. The S&P 500, which jumped from 5.5% in July, has added Monday to 0.7 % of its thrust, for now does not fall only 3 % from its peak prépandémie of 19 February. For its part, the Nasdaq has hit a new record of 10 902,80 points, up 1.5 % compared to Friday. This index strong flavor technology had jumped 6.8% last month.
As has been the case since the low reached on march 23, at the height of the pandemic, the stock market relies on the good health of the technology sector. “As long as investors and brokers, and not judge that the economy is on a trajectory that is strong, they will continue to cling to the growth in the balance sheet and the cash flow of the big names in tech,” says Quincy Krosby, head of strategy market for Prudential Financial, to the Agency France-Presse.
In Exchange, the “giants of the tech’ have attracted the label of safe-haven securities in this pandemic, with financial results generally in a strong rise, while half of the companies have reported decreases in income of 20 % or more. The technology sector, accounting for 40 % of the capitalization of the S&P 500, of which more than 20 % for Microsoft, Apple, Amazon, Alphabet and Facebook.
This rapid rise in major stock indexes after a correction of 34 % (the S&P 500) in just one month is in contrast with the recovery, the more hesitant of the economic activity. On Monday, Oxford Economics pointed out that the GDP of many developed economies, has posted declines of 10 % to 15 % in the second quarter of loon to be even more drastic in emerging economies. “We are yet to see a stabilization in June “, who wants to be dependent of the resurgence of the pandemic in many countries, ” says the firm’s research.
In fact, only the retail sales seem to endorse the scenario of the V-shaped recovery, used to fuel stock markets, but this indicator is more than imperfect. Retail sales account for 25 % to 50 % of the total consumption expenditure according to cost-savings, and several major sectors are still missing the call. Above all, this indicator is very sensitive to all measures of reconfinement, warns Oxford.
In a research note to the staff of the Bank of Canada on the website of the institution last week, James Kyeong wrote that the rapid recovery of the stock market should be interpreted with caution. “While the major equity indices have rebounded to their highest of all time, the investors have not been as optimistic about the stock more sensitive to the economic cycle. “Pointing in the direction of the distortion caused by the surge in growth securities, the giants of the technology in mind, the stock market, the underlying evolves instead according to a scenario of economic recovery is slower and less deep, so not in the shape of a V.
“To be clear, this finding does not necessarily indicate that the equity markets are currently overvalued. It rather reflects the fact that the main stock indices such as the S&P 500, are dominated by growth stocks, which should mean better absorb the negative shocks that the actions of so-called value. “Those of GAFA, more efficient, now account for more than 20 % of the market capitalization of the S&P 500. “They are widely regarded as the beneficiaries of the pandemic because they have accelerated the structural changes to the scanning,” adds the analyst, who denies, however, conclude that they are overvalued. “I leave that to the stock analysts. “
In an analysis published at the end of June, the international monetary Fund said it was concerned by the decoupling between the financial markets and the so-called real economy. To the extent that the institution came to darken his prospects of recovery, amounting now to 4.9 % of the global recession by 2020, against a scenario of 3 % formulated in April, in the heart of the pandemic.
According to the institution of Washington, the interventions of central banks and governments are fuelling a growing optimism among investors, who seem to rely on a scenario of rapid economic recovery in V which is not in the cards, ” she said.