Equity markets have experienced a strong rally through the Christmas period, led by the US market which is at all-time highs.
Closer to home, the Australian market (ASX 200) is sitting at its 12 month high, and has managed to achieve +7% return for the calendar year. While the NZ market (NZX 50) has lagged of late, it managed to end the year with a 9% gain.
The gains across local markets seems to be quite broad based, with shares rallying across sectors. Further, there has been some recent demand for bond proxy stocks, such as consumer staples, telecommunications and property stocks. While it is early to make judgement, it may indicate investors are once again being attracted towards dividend/income yield investments.
Given the strong move higher in markets, we would be hesitant in broadly buying stocks at the current juncture. and would not be surprised to see some consolidation in markets.
Markets appear to be focussed only on the positives post the US Presidential elections. In saying that, the expectations initially for a Trump win were for a market crash, which has dramatically flipped in the opposite direction. We continue to expect markets to remain focussed on announcements made by US President elect Donald Trump in regards to appointments in his administration & actual specifics around policies, which may result in some more realistic market expectations being set. As this news flow is released markets will react positively/negatively as we move through into the start of 2017.
While equity markets have moved higher, bonds continue to sell-off, and the US dollar has also moved to fresh highs.
We remain positive on the outlook for share markets heading ito 2017, although we are selective in what we are buying. Sign up for a free trial below to access our top stock picks for the year ahead.