Upon awakening this morning, ASX investors were treated to the news that the US share market had, overnight our time, made yet another new all-time high. Yes, the Dow Jones Industrial Average (INDEXDJX: .DJI) closed at 33,171 points this morning, its highest-ever closing level.
The S&P 500 Index (INDEXSP: .INX) also had a top day, coming tantalisingly close to 4,000 points during intra-day trading when it hit a high of 3,981 points for the first time.
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What is happening in the US?
You know that there are worse problems to have when all investors are worried about is higher inflation and interest rate hikes down the road. That seems to be the prevailing theme of the current state of the US markets. The US political scene is also likely to be adding to the optimism. Markets have barely digested the fulls cope of the Biden administration's mammoth US$1.9 trillion stimulus package that only came into effect this month. Most Americans would have received a US$1,400 cheque over the last week or two, which wouldn't have hurt either.
And according to Forbes, the President is now reportedly turning his attention to a new, multi-trillion infrastructure spending bill, which will be very accommodating for more economic growth if it passes Congress.
Best of all, the US vaccine rollout is going exceptionally well. This week, the White House stated that 90% of adults in the US will be eligible for vaccination by 19 April, with 90% of Americans having a vaccination site within 5 miles of where they live. No wonder the US markets are feeling bullish.
However, not all US shares are feeling the love. The Nasdaq Composite (INDEXNASDAQ: .IXIC) is the elephant in the room. Investor shave long been used to the Nasdaq topping the other US benchmark indexes. Just to illustrate, the S&P 500 is up 91.6% over the past five years, while the Nasdaq Composite is up 169%. Yet the Nasdaq is down more than 7% since 12 February, while the S&P 500 is up almost 1%.
What about the ASX 200?
So why isn't any of this optimism flowing through to the S&P/ASX 200 Index (ASX: XJO)? Well, it's worth noting that the ASX 200 is up 1.5% over the past five trading days. This comes even though it seems to be having a weak day today. But the fact remains that the ASX 200 is not even close to overcoming its pre-COVID high of 7,162 points. That's still more than 5% away (the US markets passed their pre-COVID high in August last year).
Well, we could probably explain this by comparing the two markets. The US has just pushed 'go' on major new stimulus. Our stimulus programs like JobKeeper are winding down. And our own vaccine rollout plan is a little behind compared to America's.
Still, the ASX 200 is up 31% over the past 12 months. That's worth a lot in itself!
