Global Stocks Seal Best Quarter Since 1998

By Glenn Dyer | More Articles by Glenn Dyer

The ASX will start 2020-21 on a far more modest note than it ended 2019-20. The ASX 200 ended the financial year with a rise of 1.4%. overnight trading on the index’s future platform saw a small loss of 5 points just after 7am Wednesday, despite Wall Street ended June on a solid note and the best quarter since 1998.

The ASX had a down year but a big quarter, while Wall Street’s big losses in the three months to March were almost regained in the cases of the Dow and S&P 500, but new highs were set by the tech-dominated Nasdaq.

But now the gains get tougher, and if June is any guide, stockmarkets look certain to drift somewhat aimlessly for months to come as the tide of infections and disruptions from the coronavirus batter confidence and activity.

Coming off that 20% drop in the first quarter (the biggest quarterly fall since the GFC in the fourth quarter of 2008), the S&P rallied 19.95% to notch its biggest quarterly gain since 1998, at the height of the tech boom (which of course ended in a bust and recession).

The gains on Wall Street and all other markets have been fuelled by trillions of dollars of fiscal and monetary stimulus from governments and central banks and the easing of lockdowns.

But the S&P 500 is still down about 4% on the year, and gains in June was just 2% due to the flare-up in virus cases that have threatened to delay re-openings and derail a tentative economic recovery.

Fed Reserve Chair Jerome Powell underlined the weak outlook in comments on Tuesday that the path of the economy is “highly uncertain” and the head of the New York Fed, John Williams said the economy would be weak for some time. They are messages many investors refuse to hear at the moment or ignore.

On Tuesday The Dow ended June and the quarter by rising 217.08 points, or 0.85%, to 25,812.88, the S&P 500 gained 47.05 points, or 1.54%, to 3,100.29 and the Nasdaq added 184.61 points, or 1.87%, to 10,058.77.

The Dow rose 17.78% in the quarter, its best quarterly performance since a 21.56% rally in the March quarter of 1987 while the Nasdaq’s 30.63% jump was its best quarter since a 48.18% gain in the fourth quarter of 1999 – again ahead of the tech boom-bust and recession.

Apple shares were the best performed Dow stocks in the quarter – up 43.5% for the three months to June 30 and up more than 24% for the year. Warren Buffett’s Berkshire Hathaway will be happy being the second-largest shareholder.

Microsoft shares were up 29% for the quarter and are up 29% year to date. Netflix shares rose more than 21% in the quarter to leave them up more than 40% for the six months to June 30. Tesla shares jumped past $US1,000 to settle at $US1,079, up 106% for the quarter and more than 158% for the first half of the year.

Meanwhile, the MSCI index group says world shares rose 18.7% in the quarter, the biggest quarterly gain in 11 years, but are still down more than 7% so far this year due to the slump of 34% between February 12 and March 23 (the bottom of the slump).

In Europe, the Stoxx 600 index rose 12.59% in the quarter (but was only up 0.16% in June) which still left it down 13.35% for the year to date.

Glenn Dyer

About Glenn Dyer

Glenn Dyer has been a finance journalist and TV producer for more than 40 years. He has worked at Maxwell Newton Publications, Queensland Newspapers, AAP, The Australian Financial Review, The Nine Network and Crikey.

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