Author: james Carter
Two sessions of trade overseas, while we enjoyed the Australia Day break yesterday and no doubt many will be taking today off to make it a four day weekend! On Wednesday night the Dow Jones pushed through the 20,000 level for the first time in history, with a strong +150pt rally followed up overnight by a mixed session. Locally the SPI Futures are trading at 5649, up from the close on Wednesday of 5610, implying a ~40pt move higher in our market since we last traded. Obviously 20,000 is a ‘catchy’ number however it means very little other than providing a good headline for media reports. We’ve seen many ‘physiologically important’ numbers come and go over the years and it’s simply another one of those.
This weekend the year of the rooster will be welcomed in by China, the world’s second largest economy. At the same time the largest economy enjoys its share market pushing towards record all-time highs. The US market is currently embracing any sniff of good news and ignoring the bad, like potential trade wars with Mr Trump at the helm – we have seen this degree of optimism before and it always runs out of steam at some point. We reiterate our mantra for the coming year:
The local ASX200 has now fallen almost 4% over the last 3-weeks while US stocks continue to tread water. Having locked in some nice profits during the markets explosive rally after the US election we are now back in “buy mode” into current weakness. The ASX200’s correction has primarily been focused in the financial sector where investors appear to have locked in some profits while the resources have held up reasonably well courtesy of a pullback in the $US which supports underlying commodity prices – we have played this scenario via our purchase in Newcrest Mining (NCM).
Really bullish, there's more to go in the reflation rally
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