ASX recovers, Reserve Bank flags US tech concentration risk

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Transcript

00:00Well, the share market is getting close to a record high again, after bouncing back by

00:05a solid 1.1% today. Yet corporate earnings have been going down for years, so arguably

00:11it's getting harder to justify the expensive prices that people have been willing to pay

00:15for Australian shares. A similar trend is happening in the UK and Europe, while profits

00:21in the US are going gangbusters, though that's mainly being driven by America's tech giants

00:25like Nvidia, Microsoft, Apple, Google and a few others that have seen their share price

00:30surge as a result of the AI boom, which some say is starting to resemble a bubble. In fact,

00:37these trillion dollar companies have gotten so big, they now make up 40% of the value of

00:41Wall Street's S&P 500. Now that's something the Reserve Bank says it's a little bit worried

00:45about in its latest financial stability review. Because if these companies eventually have

00:50bad days and they go on for quite a while, they'll have a huge impact on investor confidence

00:55which could flow through locally. But none of that got people worried at all today,

00:59with banks, miners and healthcare stocks driving the ASX higher. Meanwhile, the gold price also

01:05hit a new record, again, at almost US$3,900 an ounce, while the Aussie dollar is trading at 66.2 US cents.

01:14And finally, markets in the US, Europe and Asia also went up, as they weren't bothered at all

01:18by the US government shutdown, as they're getting used to US politics being dysfunctional.

01:23In fact, these markets are at or near record highs, but the equity risk premium has fallen off a cliff.

01:30So basically, it means outside of Australia, a lot of people worldwide are also probably

01:34paying too much for shares, which could get a bit messy if company earnings don't improve

01:39significantly. And that's finance.