Wall Street: when the bear trumps the bull

Posted on Sep 5, 2020 at 10:24 AMUpdated Sep 6, 2020 3:35 PM

It is the bear’s vengeance on the bull, totems of the fall and the rise on Wall Street. After months of euphoria, the equity markets took a kick, briefly falling below their pre-pandemic levels . However, investors agreed to find meaning in the regular chain of stock market records , ignoring the counter of contaminations, bankruptcies and layoffs. The same people suddenly decided to question the valuations of the tech giants which have been blazing for weeks. Apple, whose price has more than doubled since its low in late March, is it really worth as much as South Korea’s GDP? Until when can this Tesla share, multiplied by seven in six months, continue to climb when the manufacturer is not making a profit? Since March, and until last Thursday, the Nasdaq’s market capitalization increased by $ 1.6 billion per hour. Per hour.

It is impossible to know at this stage if what remains of a small correction announces a return to reality, signing the end of what analysts will perhaps describe a posteriori as a bubble, or if the stock markets will quietly resume their race towards the sky. by betting on the imminence of a vaccine. However, one constant seems to be true in the increase in recent months as in the decrease in recent days: the decoupling of Wall Street from the European stock markets. If the indices of the large Western countries, historically highly correlated, have plunged in concert at the worst of the health crisis, they have followed very distinct directions. The CAC, no more than the German DAX or the British Footsie, has accompanied the American indices in their insane rise. In recent months, investors have found European stocks too exposed to the old economy – finance, industry, energy. On the other side of the Atlantic, on the other hand, the tech giants, perceived as the big winners of containment and the world after, now weigh a quarter of the total market capitalization, and are almost enough on their own to guide the markets on a daily basis. Americans. Like, in other times, the big names in oil and telecoms.

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