Tech Stocks Rise Driving the Stock Market Higher

The past few months has certainly been interesting for everyone around the world, not just politically but in terms of health and quality of lifestyle. Some of the issues have brought us closer together while others have torn us apart, but all of these world events have affected our wealth, not just as a nation but as individuals.

Is Australia really a lucky country?

Over many decades, we have seen the divide between the haves and the have-nots in many countries around the world grow including Australia. Despite our country being considered wealthy, I have to question whether this is really the case. The divide between the haves and have-nots has caused significant division in countries like the US, which we have watched play out on television in recent months. We know Australia follows the US and while I am not suggesting we will end up like the US, we do need to address the divisions that exist in Australia right now.

We need to support Australians create more wealth in their lives by helping and supporting our farmers, small business, the less fortunate, as well as young people and the elderly. While it is every individual’s responsibility to create and look after their own wealth, if we truly want to be recognised as a wealthy nation, we need to provide support to all Australians from the ground up, not the top down.

What were the best and worst performing sectors last week?

After a slow start to the year, Information Technology has taken off on the back of a strong rise in WAAX stocks including Wisetech and Afterpay with the sector up 5 per cent. Consumer Discretionary was also strong up 4.76 per cent while Healthcare was up 3.33 per cent. The worst performing sectors included Utilities down 1.04 per cent followed by Energy down 0.95 per cent and Materials down 0.15 per cent.

The best performers in the ASX/S&P top 100 stocks included Wisetech up 19.73 per cent followed by Domino’s Pizza up 11.76 per cent and Fisher & Paykel up 10.81 percent with Incitec Pivot not far behind up 10.67 per cent.

The worst performers included Alumina down 6.27 per cent followed by Cleanaway Waste Management down 5.28 per cent with Beach Energy down 4.59 per cent and Minerals Resources down 4.12 per cent.

What's next for the Australian share market?

The All-Ordinaries Index started 2021 strongly and after being up nearly 4 per cent early in the week, it closed up last week over 3.33 per cent, which is a good sign for what might unfold this year. That said, before you get too excited, I believe this rise will be short lived because as I mentioned last week, the Australian stock market is expected to fall away slightly from late January into mid-February.

Given this, it is highly likely that will see an end to the current up move either with the high of last week or it will occur this week, with the market falling away for one to three weeks into mid or possibly late February.

In the medium to longer term, I believe the Australia stock market will perform much better than it did in 2020 and will present many good buying opportunities for those who are looking for good value stocks rather than those who like to speculate. While technology stocks and the sector are performing well right now, I believe this bubble will burst soon and the sector will not perform as well as others in 2021.

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.