This rising sentiment is spurring the share market's bull run

Technology share prices in US markets and on the ASX are again breaking record highs on rising sentiment. Here's why…

| More on:
steps rising on wall with arrow

Image source: Getty Images

You’re reading a free article with opinions that may differ from The Motley Fool’s Premium Investing Services. Become a Motley Fool member today to get instant access to our top analyst recommendations, in-depth research, investing resources, and more. Learn More

Forget the political wrangling with China.

Put aside the still myriad unresolved issues with the United Kingdom's departure from the European Union.

And Kim Jong-who now?

With the world entering its 7th month of pandemic-fuelled strife, trade wars, Brexit, and nuclear armed rogue nations are off the menu. All eyes are fixated on effective treatments and the eventual silver bullet vaccine to slay our microscopic foe, COVID-19.

Aside from the terrible mounting death toll, the virus has hamstrung businesses, households and governments across the globe since March.

On a national level, economic growth (GDP) is slowing in almost every nation, and GDP is actually shrinking in many. With some notable exceptions — largely in the technology and health sectors — company earnings have taken a big hit from the social distancing and lockdown measures put in place to slow the virus' spread. Unemployment is up sharply, income growth remains elusive, and debts are piling up to levels that may take decades to repay.

But in this fight against 7.8 billion humans armed with the latest in 21st century technology and accumulated knowledge, the smart money is increasingly betting against the coronavirus.

Advantage humans

Over in the US, Allied BioScience is opening a new front against the virus in the form of its product, SurfaceWise2. Catchy name aside, it's applied by electrostatic spray to create a protective invisible layer that kills viruses. It reportedly kills COVID-19 on surfaces for a period of 90 days.

Yesterday (overnight Aussie time) Allied BioScience announced that the US Environmental Protection Agency (EPA) had given Texas-based companies a waiver to use SurfaceWise2.

American Airlines Group Inc was quick to jump on the waiver. In its announcement yesterday, American  Airlines said it will be the first airline to use SurfaceWise2 as its electrostatic spraying solution:

In the coming months, American will begin using SurfaceWise2 for electrostatic spraying on surfaces inside its aircraft with plans to use the product throughout its entire fleet, including those in its American Eagle regional partners.

The American Airlines' share price closed up 10.5% yesterday. And the share price is up another 2.5% in after-hours trading. Though shares are still down 56% from this year's 12 February peak.

Allied BioScience shares trade on the US over-the-counter (OTC) markets. Shares on OTC markets aren't listed on a centralised exchange, but rather traded via broker-dealer networks. The Allied BioScience share price gained 31.9% on yesterday's announcement.

The final answer could usher in a share market boom

Stopping the coronavirus from lingering on surfaces is a big step towards slowing its spread.

But the final answer lies in effective treatments and a mass-produced vaccine to return travel, work and life to normal.

On that front, hundreds of leading companies are involved in developing a vaccine. And powerhouse nations like China, Russia, the UK and the United States are pushing ahead with human trials.

Over the weekend the US Food and Drug Administration (FDA) announced that it was working to increase access to a promising new treatment that employs blood plasma from people who have recovered from the virus. And US President Donald Trump is reportedly considering using his clout to fast track an experimental vaccine. Hoping, no doubt, for significant success before the November presidential elections.

With an eye on the prize, investor sentiment is driving new share market gains.

Technology share prices hit new records

While most share prices are on the upswing, technology shares continue to lead the charge.

Over in the US the NASDAQ-100 Index (NASDAQ: NDX) closed up 0.6% for another new record high. Year-to-date, the index of the biggest 100 US-listed technology related stocks is up 31%. Since the March low, it's gained 66.2%.

But it's not just US technology shares that are soaring.

Here in Australia, the share price of buy now, pay later (BNPL) darling Afterpay Ltd (ASX: APT) is rocketing again today, up 6.5% in late morning trade. That puts Afterpay's share price gains at 28.4% so far in August, and the share price is up a smashing 188% since 2 January.

Afterpay received a welcome boost in today's trading (as if it needed one) after broker Morgan Stanley raised its target for the BNPL leader to $106 per share. That's more than 20% above Afterpay's current share price of $88.05.

BNPL rival Zip Co Ltd (ASX: Z1P) is also trading at new record highs. The Zip share price is up 3.9% in intraday trading and up more than 118% year-to-date.

Joining them in record high territory is electronics retailing giant JB Hi-Fi Limited (ASX: JBH). JB Hi-Fi's share price is up a more sedate 0.5% in today's trading and up 35.5% in so far in 2020.

Though these stocks are leading the way higher, the performance of the All Ordinaries Index (ASX: XAO) shows that that rising investor sentiment spreads well beyond the favoured technology shares.

The All Ords is still down 7.0% year-to-date. But it's in the green again today, up 0.5%, with a remarkable 38.8% rebound since the 23 March low.

If and when a vaccine eventuates, and global economies begin to emerge from their cocoons, the best placed companies could make the ASX share price gains of the last few months pale in comparison.

Bernd Struben has no position in any of the stocks mentioned. The Motley Fool Australia's parent company Motley Fool Holdings Inc. owns shares of ZIPCOLTD FPO. The Motley Fool Australia owns shares of AFTERPAY T FPO. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Scott Phillips.

More on Share Market News

A man looking at his laptop and thinking.
Share Gainers

Here are the top 10 ASX 200 shares today

It was a disappointing hump day session for the ASX today.

Read more »

Young man with a laptop in hand watching stocks and trends on a digital chart.
Broker Notes

Top brokers name 3 ASX shares to buy today

Here's what brokers are recommending as buys this week.

Read more »

Man with a hand on his head looks at a red stock market chart showing a falling share price.
Share Market News

Why A2 Milk, Boss Energy, Evolution Mining, and Lifestyle Communities shares are sinking

These shares are under pressure on hump day. But why?

Read more »

A young man talks tech on his phone while looking at a laptop. A financial graph is superimposed across the image.
Share Market News

Why Botanix, Dexus, Strickland, and Telix shares are charging higher today

Let's see why these shares are having a good session on hump day.

Read more »

A man sits in deep thought with a pen held to his lips as he ponders his computer screen with a laptop open next to him on his desk in a home office environment.
Share Market News

What does Macquarie think Origin Energy shares are worth?

Let's see what the broker is saying about this energy giant.

Read more »

A female sharemarket analyst with red hair and wearing glasses looks at her computer screen watching share price movements.
Broker Notes

Up 34% this year, can Challenger shares keep rising according to Macquarie?

The leading broker has released a new research note.

Read more »

A man holds his head in his hands, despairing at the bad result he's reading on his computer.
Share Fallers

Guess which ASX 200 stock is crashing 42% on big news

Big bad news is weighing heavily on this stock today.

Read more »

An analyst wearing a dark blue shirt and glasses sits at his computer with his chin resting on his hands as he looks at the CBA share price movement today
Opinions

Expert's verdict on 3 ASX 200 shares (2 have doubled in value and the other has lost 29%)

Two of these stocks were the best performers of their sectors in FY25. Should you buy, hold, or sell?

Read more »