The Daily: Record amount of ETF buying pushes up markets

The Nasdaq 100 $NASDAQ 100 Index (.NDX.US)$ surged 2.4%, gapping higher, which is a technical bullish signal suggesting serious buyers are stepping into this rally in the belief US stocks will hit new record all-time high in months.

Nvidia $NVIDIA (NVDA.US)$ led the rally overnight, rising 3.2% ahead of its expected mammoth earnings report tomorrow morning. When delivered, this may send its shares about 7% higher if the market gods like what they see. Tesla $Tesla (TSLA.US)$ also saw a lot of buying, sending its shares up 7%, taking Elon Musk’s worth to US$390.4 billion, as people’s conviction is rising in the company, with Musk slipping out the White House back door to focus on the EV giant. While hopes are high ahead of Cybercab being rolled out in some US states.  Meanwhile, the US dollar rose ahead of US Federal Reserve minutes being published, and ahead of the Fed’s preferred inflation gauge being released.

What we have here is nothing new. The same story unfolded during Trump’s first term and the trade wars. Markets and investors are now desensitized to Trump’s ‘negotiation’ antics and tariffs. They’re instead buying record amounts of ETFs, including US$14 billion of the Vanguard S&P 500 ETF $Vanguard S&P 500 ETF (VOO.US)$ over the past four weeks. Investors see a healthy economy, and strong earnings from listed companies, which increases their confidence in stocks.

What’s even more exciting are the bets for July, with some options suggesting the Aussie sharemarket $S&P/ASX 200 (.XJO.AU)$ could get to 8700. But markets don’t go up in straight line, and today’s inflation data could dampen spirits if it doesn’t show CPI fell to 2.3% year-on-year as expected. But should we get a hiccup, I suspect the dip will be bought over time and the Aussie market will keep rising. The most bought ETF in Australia this month is the $Vanguard Australian Shares ETF (VAS.AU)$ with $355 million bought of the ETF in four weeks.

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