New investors to be challenged by market pullback
The market is likely to have a pullback for one or two weeks, starting this week, but it is likely this will be short lived, according to Wealth Within.
Dale Gillham, Wealth Within chief analyst, said he expected the market to be mostly bullish around mid-May and possibly longer, with a rise to 7,600 points for the All Ordinaries index.
“This week the All Ordinaries index continued to move higher to achieve a new all-time high after breaking the previous high of 7,289.7 points set back in February 2020 just before the COVID meltdown,” Gillham said.
“While this is good news, what many investors don’t really appreciate, especially those new to the market, is that the fall and subsequent rise that unfolded between February 2020 and now is unprecedented and abnormal, as the market has never behaved like this in the past.
“Given this, the increased number of investors who have jumped into the market since the March 2020 low are yet to be challenged.”
Gillham said history dictated that if the stockmarket was bullish in the first quarter of the year, it would likely end the year in positive territory.
“Over the last 70 years, statistics on the Dow Jones Index confirms that if the first quarter of the year is bullish, it will almost certainly have a positive gain for the year,” Gillham said.
“In the first quarter of 2021, the Australian market rose 2.43%, while the Dow Jones Index rose over 7% or around four times more than its historical average.
“While this is very bullish, most of the gain occurred in March of this year. Interestingly, the tables have turned slightly given that the All Ordinaries index has so far risen around 60% more than the Dow Jones in April.”
Gillham said financials, consumer discretionary and communications were the best-performing sectors over the first quarter, while information technology was the worst.
According to FE Analytics, the best-performing ASX 300 sectors were technology hardware and equipment (17.29%), banks (15.51%), telecommunication services (13.85%), consumer services and financials (12.14%); the ASX 300 had grown 4.15%.
“Although in the first two weeks of April [information technology] has risen nearly 15% on the back of strong gains from Afterpay and Xero,” Gillham said.
“As I have said in many previous reports, I am confident that the energy, materials and financial sectors will do well this year, so it will be interesting to see how the market unfolds from here.”
Best-performing ASX 300 sectors in Q1 2021
AUTHOR
Chris Dastoor
Recommended for you
Australian equity ETFs attracted record inflows of $3.2 billion in 1Q25, while heightened volatility led to a decline in flows for global equity ETFs, according to Vanguard.
The failure of a clinical trial by biotech firm Opthea has caused shares in its backer Regal Partners to decline 52 per cent year-to-date and hit its funds under management, quarterly flows show.
GQG Partners has revealed its quarterly flows for the first three months of 2025 were up 5.8 per cent, after a difficult final quarter of 2024 as a result of institutional redemptions.
Global asset manager Janus Henderson has signed a strategic partnership with life insurer Guardian Life, which will commit US$400 million to accelerate the firm’s fixed income development plans.
