Nasdaq Index Behavior hints on the ripening bubble
The Nasdaq index updated its all-time high on Thursday, exceeding $ 11,000.
Asset Markets Send Conflicting Signals.
It is possible that the Nasdaq is forming a 1999-style bubble of the year.
Nasdaq stock index on Thursday Composite hit an all-time high, closing above 11,000 for the first time in history. Some fear a bubble.
Yesterday, the American Nasdaq index burst into yet uncharted territories, completing the auction for the first time above 11000 marks. The main driver of this growth analysts believe the market reaction to the unemployment data released yesterday in USA. Index new claims for benefits decreased, as did the total number unemployed. Improved statistics on the market U.S. labor inspired investors.
At the forefront growth recognized technology giants – the group of companies FAANMG (FacebookIn June 2019 of the year company Facebook announced preparations for release digital currency Libra. Project social networks instantly attracted attention… More, Amazon, Apple, Netflix, Microsoft, and Google). Their market capitalization already exceeds $ 7 trillion. it more the aggregate value of the financial, energy, industrial and raw materials sectors. Accordingly, on this against the background of the technological index Nasdaq managed to excel.
However not everything so unambiguous. Many market participants are concerned about the question: why the aggressive rally to new historical highs was simultaneously arranged by the assets, which earlier showed inverse correlation.
Stock index growth always traditionally associated with an interest in risk. but now, in addition to stocks, we are witnessing a dizzying rise in gold. The precious metal has always strengthened against the backdrop of a flight from risk to defensive assets, but Now it grows with the stock market.
Recently edition BeInCrypto wrote about the rally in gold to new all-time highs and him correlations with “digital gold” – bitcoin (MTC). Also we said yesterday that silver also made a new 7-year high, and wherein some experts began to note that silver and bitcoin have been showing similar dynamics since the beginning of February.
Caution won’t hurt
As JPMorgan analysts recently noted, there is now a general market interest in investing in various asset classes considered means preservation of value – including gold, silver and bitcoin. However, coupled with the updating of historical highs by the Nasdaq index, this depicts a very contradictory picture that can confuse many investors..
In this regard, it is possible that the shares of the technology sector now substantially overbought thanks to the liquidity generously poured into the markets by the authorities. Amid record low bond yields, investors are trying to park money in other sectors. In the stock market they are chasing dividends, and investing in protective assets, hedge inflation risks.
The Nasdaq may already be forming a bubble similar to the one that took place in 1999 amid the dot-com boom. IN this connection makes sense keep an eye on behind inflation. If policy of unprecedented quantitative mitigation will nevertheless lead to higher inflation, investments in equities will depreciate significantly, and capital flows from them will pour into such value stores as gold or bitcoin. AND then bubble can burst.
All information, contained on our website, published on principles good faith and objectivity, and exclusively with familiarization aim. Reader by yourself carries complete responsibility per any actions, committed by him on the basis of information, received on our website.