Australian Stock Market to Rise Strongly into 2021
By Dale Gillham |
If there is one thing that 2020 and the coronavirus has taught us this year is that we cannot be complacent, as the world is at a point where our health and security can be challenged at a moment’s notice. Unfortunately, complacency is often intertwined with ignorance because as the old saying goes “ignorance is bliss”.
Coronavirus has taught us that we cannot be complacent about our future
However, in my experience, ignorance is expensive especially when it comes to building wealth for your retirement. As the research highlights, Australians prefer to save for a holiday or spend money on other lifestyle choices rather than prepare for retirement. Yet the one thing 2020 has taught us, is that everything can be taken away in a heartbeat and ignoring this fact can be a costly mistake.
Unfortunately, too many people move towards retirement without much thought or planning, as they believe their superannuation or the pension will suffice, yet the evidence strongly indicates otherwise. This year we learnt that our job could be taken away or put on hold indefinitely, which can affect your lifestyle and potentially delay your retirement. If is for this reason why it is even more important than ever to plan for that inevitable rainy day.
The Government cannot continue to borrow heavily and shell out money indefinitely to support Australians should another COVID-19 like event happen. Therefore, it is up to each of us to be prudent with our money, which means investing wisely so that you have sufficient income to retire comfortably.
What were the best and worst performing sectors last week?
What an interesting week it was with the ASX systems shutting down last Monday and halting all trading. Despite this, our market performed well with the Financial Services sector up 6.18 per cent followed by Energy up 3.06 per cent while Consumer Discretionary was up 1.42 per cent. The worst performing sectors included Information Technology down 1.63 per cent followed by Communications Services down 0.65 per cent and Utilities down 0.46 per cent.
Looking at the ASX/S&P top 100 shares, the best performers included Unibail-Rodamco-Westfield, which jumped strongly again up 25.68 per cent with retail investors attempting to profit from a stock that has performed very poorly over the past few years. Next is Bendigo Adelaide Bank up 14.54 per cent followed by Alumina up 12.83 per cent and Whitehaven Coal up 11.74 per cent. The worst performers included Evolution Mining down 8.85 per cent followed by Northern Star Resources down 7.15 per cent and Ausnet Services down 6.5 per cent.
What do we expect in the market moving forward?
The Australian market continued to rise on the back of good news around a COVID vaccine with the market rising for thirteen of the last fourteen trading days achieving a gain of just over 10 per cent. During that time, the market only closed lower than it opened on three days, one of which was last Friday. While it is possible that the market may move down for a few days in the coming week, over the medium term everything looks good for the All Ordinaries Index to rise strongly until late January and possibly into February.
Given this, my expectation is that All Ordinaries Index will continue to move up to break above the previous all-time high set in February of this year at 7,289 points. While I don’t expect the technology sector to be a big mover during this period, I do believe stocks in the Energy, Materials and Financial sector will perform well. Given the volatility in the market right now, it is not a good time to be taking risks to bottom pick stocks, nor is it the time to be buying penny dreadfuls, rather you should be focusing on quality blue chip stocks.
For now good luck and good trading.
Dale Gillham is Chief Analyst at Wealth Within and international bestselling author of How to Beat the Managed Funds by 20%. He is also author of the award winning book Accelerate Your Wealth—It’s Your Money, Your Choice, which is available in all good book stores and online.