Alexandre Baradez, head of market analysis at IG France, insists on the nervousness of investors in the run-up to the US presidential election.
This tension has been reflected since mid-August by a concomitant rise in the Nasdaq 100 index of the largest American technology stocks and in its volatility.
Fall of the Nasdaq
This unusual phenomenon (when prices go up volatility most often decreases) preceded the Nasdaq 100’s three-session drop of 11%, with the index reverting to its fifty-day moving average.
The correction followed an 84% increase in the index from its low on March 23!
Despite this spectacular increase, Alexandre Baradez relativizes the high prices of the star values of the American rating. The estimated PER of the Nasdaq 100 exceeds 40, the highest since 2004, but it is still far from the 85 reached in 2000!
Prices could therefore go higher, despite the speed and scale of the movement. Unless the unfortunate experience of the internet bubble slows down purchases or if the Federal Reserve changes its monetary expansion policy.
American stocks become expensive
The valuation of the S&P 500 seems more tense, at nearly 30 times the expected profits against a peak of 33 in the year 2000.
The recent downturn in the US stock markets can also be explained by gloomy economic indicators, expected profits down 20% in the third quarter, a lower appetite for private bonds and consumer confidence that does not rise.
More positive is the good resistance of the European stock markets to the decline of Wall Street, which confirms the beginning of sector rotation in favor of activities more sensitive to the economy.
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