The Australian share market rebounded in September, recording solid gains throughout the month.
The All Ordinaries Index gained 4.5% to close at 4,636.9 points. Global markets were also strong in September with the Dow Jones Index gaining 7.7%, the FTSE gaining 6.2%, the Nikkei 225 gaining 9.2% and the Hang Seng gaining 9.0%.
The September market rally was largely as a result of ‘oversold’ market conditions. Value had emerged with people ‘spooked’ by the possibility of a ‘double-dip’ recession in the United States.
The US Federal Reserve (the equivalent of the Reserve Bank in Australia) hinted during September that if a ‘double-dip’ were to occur, they would intervene with more stimulus. This was seen as a positive sign, and when coupled with reasonable economic data, caused the market to rally strongly.
I attended a seminar on the 17th of September with Chris Caton, the chief economist from BT Financial Group presenting. The general theme of the presentation was positive and Chris does not believe that a ‘double-dip’ recession is likely.
Chris expects the Australian share market to end the financial year at around 5,000 points, a gain of 8% from current levels. He also believes that the Australian dollar is overvalued, and has a target vale of US83 cents by the end of the financial year (a decline of more than 13% from current levels).
In political news (and to my surprise) Labor was returned to office to form in a minority government. It certainly is interesting political times and I will be fascinated to see how the next few years transpire.
The Reserve Bank of Australia kept rates on hold in September. The RBA will meet next Tuesday to assess interest rates. There is mounting pressure to increase rates either in October or November.
For more information please contact Ryan Love on 1300 856 338 or e-mail ryan.love@apexpartners.com.au.
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