Markets have had a massive November. The US and Australian markets are currently up by around 11%, with Europe up even more.
Further, we’re heading into a seasonally strong time of year for markets (December and January).
The US election, record low interest rates and QE and vaccine optimism have combined to put a rocket under equities.
In Australia, financials have been big movers over November. The Big 4 banks have all surged higher. Big resources – RIO/BHP/FMG have been less spectacular but still quite strong. While the iron ore price remains at US$120/ton, all will be making massive amounts of money.
So it looks like happier days on the ASX again. With US markets back to all-time highs, there’s no reason why our market can’t follow.
A bit of a surprise for me has also been the relentless strength of the $A which is now nudging US74c. It’s actually moved a fair bit higher since the RBA’s most recent move to cut interest rates by 15 basis points and expand its bond buying program.
The RBA will struggle to tame it now that it has pretty much emptied its bazooka (bar plunging into negative rates). As a result, US strength (or lack) looks like it will dictate where the currency goes in the short-to-medium term. Australia’s better current performance in terms of case numbers has probably contributed to the grind higher in the currency.
That probably won’t last forever, but while commodities remain on the front-foot, the $A looks on pretty sure footing.
Sit back, strap in.