Yesterday saw the local banks enjoy a stellar session with Westpac (WBC) the standout surging 3.3% as it even managed to post small gains for September. November is approaching fast and that’s when 3 of the major 4 Australian banks both report and pay healthy dividends e.g. WBC is forecast to yield around 4.65% fully franked over the next 12-months. Hence it’s not surprising that the Australian banks usually rally strongly through October although I’m sure a few subscribers would be surprised to know that over the last decade they have generally fallen through both November & December i.e. they aren’t the best place to be invested for the Christmas rally.
When we look at US banks they are still close to their recent highs as the sector has embraced the rising bond yield environment, a macro backdrop that should provide a solid tailwind for banks across the world. We are bullish the US Banking Sector moving into Christmas but would be cautious chasing new highs too aggressively as we remind ourselves of the markets “3 steps forward 2 back” rhythm through much of 2021.
