March marks approximately 10 years since the beginning of the bull market, and whilst word on the (Wall) street is that we are entering a bear market, Wealth Within’s chief analyst, Dale Gillham, says the All Ordinaries Index has continued to surprise him with its resilience.
Gillham said the All Ordinaries took a hit earlier last week, and while investors were wondering if it was time to jump ship, the Index clawed back much of the fall.
But while the market has fallen slightly, Gillham doesn’t think it’s fallen far enough in price, and expects another one or two per cent dip in the short-term.
“That said, if it takes off from its current levels, it just means a larger fall is expected either late in the third quarter or early in the fourth quarter of 2019,” he said. “Over all I believe the market is bullish and we should see some smooth sailing ahead.”
Some contributors to the clawback, according to the analyst, were Challenger Limited, which jumped nine per cent after news broke that it would receive extended funding for reinsurance-based product from Japanese Insurance group, MS&AD.
As well, a Wesfarmers takeover bid for rare earth miner, Lynas Corporation, which was subsequently rejected, saw the share price of Lynas jump a whopping 38 per cent.
But a detractor, perhaps, was the financials sector, which, while it experienced a decent run after the Banking Royal Commission report was released, now doesn’t look so strong.
“We are now starting to see the dust settle and the sector is not looking all that strong,” said Gillham. “Therefore, I still believe this sector should be avoided in the short term, and that investors wait until the second half of the year when the banks are likely to perform better.”
Data from FE Analytics shows the S&P ASX All Ordinaries Index returned 11.06 for the year to date, with the S&P ASX 300 Information technology sector still in the top spot for the same period, with returns of 19.95 per cent.
Gillham’s assertion that financials were a no-go this year is backed up by data from FE Analytics too, which has put the S&P ASX 300 Financials sector at second-to-last, returning 5.94 per cent for the year to date.
The chart below tracks the performance of the S&P ASX All Ordinaries Index and the top three market sectors from 1 January 2019 to 1 April 2019.
