26 October 16

Which countries’ sharemarkets are most likely to benefit from the economic recovery?

In Australia, the reporting season was mostly in line with market expectations and some solid results from consumer and housing related companies showed pockets of strength within the economy.

The Australian banking sector also continued to post resilient financial results. These were achieved despite the negative headlines in the media and the obvious pressures of declining interest rate margins, and slightly higher bad debt charges.

Another positive for the Australian sharemarket is that the materials sector which has fallen in size since the end of the resources boom has recently benefitted from higher commodity prices. If prices remain elevated, improvement in the fortunes of the major miners should help to maintain or improve Australia’s current 3.3% GDP growth rate. This would be a positive for the sharemarket generally.

Other sectors are likely to benefit from any further depreciation in the $A and would also aid Australia’s transition from the mining-led economy to one based more on education, services and consumption (which are less cyclical in nature).

As such, the long term outlook for Australian economic growth and share market return expectations remain positive.  Please click here to read the short article: https://goo.gl/zZRX65