July 2020 Market Wrap Sunday 2 August 2020 – Antipodean Advisory

Friday night was all about Blowout numbers and upbeat commentary from Apple (AAPL), Amazon.com (AMZN) and Facebook (FB) last night may have just put all of the peak US, Large Cap, Tech skeptics to bed?

Shares of Apple Inc. AAPL 10.47% got a big bounce after the tech giant revealed plans late Thursday to execute a 4-for-1 stock split later in August. In that case, the company will quadruple its number of shares outstanding and hand out the extra shares to existing investors, dividing the price of an original share by four but leaving the company’s market valuation unchanged. The stock rose 10% to $425.04 on Friday, extending its gain so far this year to 45% after the iPhone maker also reported stronger-than-expected earnings on robust sales of apps and its work-from-home devices. The company added about $172 billion in market value, a one-session gain that tops the size of Oracle Corp., Chevron Corp. and McDonald’s Corp.

While the split won’t affect Apple’s valuation, which swelled to $1.817 trillion on Friday, it has implications for investors, as well as for two of the stock indexes in which Apple resides: the Dow Jones Industrial Average and the S&P 500 index.

The global economy continues to build on its recovery, but the drivers are now changing, with Europe and Emerging Markets ex China now catching up to the significant progress that US and China had already made.

Turning to the domestic economy, economic conditions in Australia had weakened significantly since the start of the year, but the downturn had been less severe than feared a few months earlier. Consumer spending in May and June had been stronger than expected, and had also held up better than in most other countries. Manufacturing and construction activity had also been less affected in Australia than elsewhere. Similarly, the contraction in the labour market had been less severe than expected in May. Nevertheless, the shock to the Australian economy would be the most severe since the 1930s, and the outlook remained highly uncertain as it depended in large part upon containment of the pandemic.

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