The S&P/ASX 200 closed flat yesterday, just 0.1 points lower than where it started the session. However, the index had an interesting journey during the day, falling by 120 points at the open, or 2 per cent, to hit 5100 points.
It spent the rest of the day climbing back up, boosted by late morning news of an 8 per cent increase in retail sales for March, and strong US futures in the afternoon. An absence of bad corporate news kept sentiment on track.
Meanwhile, analysts at Macquarie Research warned ASX-listed stocks remain quite expensive, with price to earnings multiples still higher than the 18-year average.
“These are not cheap valuations for a contracting economy where over one-third of the largest ASX companies have withdrawn guidance.”
Macquarie said such rich valuations will constrain further upside over the short-to-medium term, noting that consensus earnings per share (EPS) downgrades are still roughly half the level seen during the GFC.