What are your Santa Rally Expectations?

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Question asked 25/11/2023

What are your Santa Rally Expectations?

Hi guys, just a quick one today. What do you think could be a realistic Santa rally. Looking across a few indexes we can see that the U.S. has had a really good rally lately and pretty much all pushing their highs; likewise, Euro indexes, even through Asia. The U.K and ASX and still crawling around on the ground being only approx. 4% from their lows. The CAC has seemed to run well, and although we are similar with the FTSE, I feel we are lagging behind. I know we are still having inflation issues and not looking as good as other places, but with that, businesses are still earning. Even with a 3% rally, we'd only be back to where we were a few months ago. Regards, Simon

Answer

Hi Simon,

Experience has told us at MM to never underestimate the ability of stocks to surprise on the upside through December and that the move often starts late on, when investors have given up hope. Global indices do take on their own characteristics over this period for a variety of reasons, e.g. through December over the last 10-years the ASX200 has advanced an average of +0.83% whereas the US S&P500 has actually slipped -0.12%.

The main difference locally is the plethora of dividends which investors receive in the second half of December, e.g. from the major banks:

National Australia Bank (NAB) +15th, ANZ Bank (ANZ) 17th, Westpac (WBC) and Macquarie on the 19th.

Coming back to the question, we can see the ASX200 testing the 7300-7400 area, or 4-5% above Friday lunchtimes level.

chart

ASX200 Index

LAST UPDATED 24/11/2023 12:22

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