In case you missed it, the S&P/ASX 200 Index (ASX: XJO) just leapt into new record-high territory.
In late morning trade on Tuesday, the index of the top 200 Aussie listed companies is up 0.7% at 8,313.2 points.
That surpasses the previous record intraday high of 8,285.7 points, set on 30 September. The index closed that day at 8,269.8 points, also marking a new closing high. Barring an intraday sell-off, that means we could see a new closing high today as well.
With today's intraday gains factored in, the ASX 200 is up an impressive 18.3% since this time last year.
Of course, that doesn't include the dividends a lot of these companies pay to shareholders during the year. So, let's add those back in.
The S&P/ASX 200 Gross Total Return Index (ASX: XJT), which includes all cash dividends reinvested on the ex-dividend date, is now up 22.7% over 12 months.
Good luck getting that from a term deposit!
Turning to the biggest two stocks on the ASX, the Commonwealth Bank of Australia (ASX: CBA) share price is up 1.0%, while BHP Group Ltd (ASX: BHP) shares are up 0.9% at this same time.
Why is the ASX 200 hitting new all-time highs?
Investor sentiment has been buoyed on a number of fronts in recent months.
Inflation in Australia is proving to be sticky and remains above the Reserve Bank of Australia's target rate of 2% to 3%. But it has still been falling and getting ever closer to that target.
That means investors may yet see the RBA move to follow the US Federal Reserve and begin cutting interest rates in 2024. Barring 2024 rate cuts, markets have priced in numerous cuts in 2025, which should help support ASX 200 shares moving forward.
The Aussie market also tends to perform better when US stock markets are tracking well.
And US markets have also been going gangbusters, spurred by the Fed's recent 0.50% interest rate cut and ongoing enthusiasm over the growth potential offered by the AI revolution.
Overnight, the S&P 500 Index (SP: .INX) closed up 0.8% to end the day at 5,859.9 points. Like the ASX 200, this also marked a new all-time high for the S&P 500. Remarkably, that's the 46th record high posted by the S&P 500 this year.
There's also growing speculation that the big US companies will beat the market's rather dour earnings expectations.
According to Bloomberg Intelligence data, strategists forecast S&P 500 stocks will post a tepid 4.3% year on year increase in quarterly earnings. That's well below the 16.0% growth suggested by corporate guidance.
Commenting on that discrepancy, Ritholtz Wealth Management's Callie Cox said (quoted by Bloomberg):
Wall Street has underestimated Corporate America lately. This environment is tough to get a read on, and I don't blame anybody who's approaching this rally with a bit of scepticism. We still think the biggest – and most expensive – risk here is to miss a rebound and an eventual rally higher.
With ASX 200 companies also reporting their September quarter results, today's record intraday high may not stand for long.
