Despite a takeover bid against it, AGL Energy (ASX:AGK) Ltd has led the ASX higher today after it fell to a two-week low in early trading.
The S&P/ASX200 gained 12.90 points or 0.18% to 7,234.60, despite crossing below its 50-day moving average. Over the last five days, the index is virtually unchanged, but is down 2.82% for the last year to date.
The top performing stocks in this index are AGL up 11.87% and the A2 Milk Company Ltd up 11.32%.
Atlassian (NASDAQ:TEAM) founder Mike Cannon-Brookes and takeover partner … put in a lowball $4.6 billion bid for AGL, that the listed energy giant rejected.
It is likely, this isn’t the last we’ve heard of a takeover as Cannon-Brookes takes his energy activism to high carbon emitting businesses.
Could we see the likes of Cannon-Brookes force the hands of several legacy energy companies to do the right thing or be acquired?
Is the US market overvalued?
As we do each Monday, we asked Wealth Within founder and chief analyst Dale Gillham his take on the market.
“Most stock exchanges around the world have performed poorly this year with only Singapore, Hong Kong, London and Malaysia trading in positive territory. While Australia is down slightly in 2022, the world is more concerned with the US markets, as many are suggesting they are fundamentally overvalued and, as a result, they have been hit harder, especially the tech sector as the NASDAQ is down around 10%.
“There have been many emotive headlines of late including the bubble has burst, the crash is happening now, get ready for the biggest crash ever, yet the US markets are only slightly weaker and they are certainly not crashing. This is because the economic situation in the US right now is vastly different to what it was during the crash in 1987 and with the GFC in 2007, as both crashes were preceded by bubbles that were driven by rampant speculation and over borrowing, neither of which is prevalent today. That said, I do believe the US stock market is somewhat overvalued, which is a normal occurrence in any bull market.
“Right now, inflation in the US is high, which is concerning although it is not high across the whole economy, instead it is contained to areas, such as energy costs. So, while inflation is high, we need to understand what is driving it and so far, everything is pointing to things settling once the world’s supply chain issues are resolved post COVID.
“The US Fed Reserve is also talking about four interest rate rises this year although so far it has only been talking and the Fed have been known to say things to see how the stock market reacts, which has seen all US indices falling. The question now remains as to whether the US market will crash this year. While I believe the market is slightly over valued, it will not crash. Instead, it will fall in a normal downward move most of which has already occurred, if not already over.
“This year the Dow Jones has been down around 10% while the S&P500 has been down around 12% and there is a possibility they may fall between 15 and 18%, which will be confirmed in the next few weeks. Despite this, I believe the US markets will have a positive year.”