Market climbs wall of worry
Popular opinion may be on a downer, but equity markets continue to rise. The US, Germany and the UK all reached record highs last week. Even Japan closed out above 20,000, which hasn’t been seen since Dec 2015.
It may be an unloved rally but we believe the market will continue to climb the wall of worry for the rest of the year.
In Australia sentiment amongst retail investors is low. There is a lot of negative news about the banks off the back of the bank levy, as well as concern for the resources sector in light of additional taxes on major miners such as BHP and RIO.
But when retail investors are negative, it’s usually a sign that the market is about to turn and begin to rally.
- sponsor - Wealth Know How
Wealth Know How is the online network helping people manage their wealth through financial education. Whether you are looking for simple ways to better manage your cash, or you are after a complete strategy on how to save for retirement, we can help you understand your options. It is important to have a vision for your future, but its knowledge not dreams that will ultimately deliver financial success.
Published on 07 Jun 17
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Popular opinion may be on a downer, but equity markets continue to rise. The US, Germany and the UK all reached record highs last week. Even Japan closed out above 20,000, which hasn’t been seen since Dec 2015.
It may be an unloved rally but we believe the market will continue to climb the wall of worry for the rest of the year.
In Australia sentiment amongst retail investors is low. There is a lot of negative news about the banks off the back of the bank levy, as well as concern for the resources sector in light of additional taxes on major miners such as BHP and RIO.
But when retail investors are negative, it’s usually a sign that the market is about to turn and begin to rally.Sponsor - Wealth Know How
Wealth Know How is the online network helping people manage their wealth through financial education. Whether you are looking for simple ways to better manage your cash, or you are after a complete strategy on how to save for retirement, we can help you understand your options. It is important to have a vision for your future, but its knowledge not dreams that will ultimately deliver financial success.
-
Venezuela tension heats up
Duration 03:16
-
Aussie dollar surprises market
Duration 03:10
-
Markets climb as investors watch US healthcare bill
Duration 02:31
It may be an unloved rally but we believe the market will continue to climb the wall of worry for the rest of the year.
In Australia sentiment amongst retail investors is low. There is a lot of negative news about the banks off the back of the bank levy, as well as concern for the resources sector in light of additional taxes on major miners such as BHP and RIO.
But when retail investors are negative, it’s usually a sign that the market is about to turn and begin to rally.
In the US, there is constant discussion about whether the market is overvalued. Yet companies like Apple, Alphabet and Amazon continue to lead the US market higher.
The cloud of doom is the possibility of slowing world growth associated with China. There is fear that decelerating growth in China will cause global growth to slow as well. This is one of the main reasons we have seen a decrease in commodity prices like Iron Ore.
On the flipside, there are many factors that will support global growth such as:
The recent US Employment Report, released last week, does not alter the view that the US Federal Reserve will raise interest rates this month.
The US unemployment rate declined to its lowest level since 2001, with survey evidence suggesting it will continue to fall in the next few months.
Despite the negative Australian sentiment, it’s fairer to describe the Australian economy as half full rather than half empty. Saying that there may be surprises when the Australian GDP data is released today.