Author: james Carter
Last night global equities surged on speculation that the ECB (European Central Bank) will continue with its bond buying program hence keeping a lid on interest rates short-term. The Dow rallied almost 300-points to another all-time high led by the “yield play” stocks – REIT’s and Telco’s. Our call for the yield play yesterday remains on track:
The local market only gaining 28-points yesterday was a disappointment compared to most global indices but today the market is looking to open up another ~30-points. The price action intra-day yesterday told a tale which we believe is likely to follow through into 2017 – BHP fell 59c from its early highs, banks gave up much of their gains but the “yield-play” stocks rallied hard e.g. Sydney Airports (SYD) +20c plus other poor performers in 2016 got an obvious bid tone e.g. Age Care stocks.
In yet another déjà vu moment for our time zone yesterday, it felt like stocks were in for a tough few days following the Italian referendum. Although the anti-government NO Vote winning was anticipated by the polls, unlike the Trump result, the crushing margin sent our ASX200 down 43- points (0.80%) and the European / US futures lower. However, this morning our Bloomberg is showing strong gains from most of Europe and the S&P500 gaining ~0.6% in a reaction bearing resemblance to the US election, just on a smaller scale.
Really bullish, there's more to go in the reflation rally
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