In a show of why it’s generally a good idea to invest with a buy and hold strategy in mind, the market has been making a rather impressive recovery since the Brexit triggered shock events throughout the world’s markets.
For the three months ending on September 30th, the All Ordinaries gained 5.3% to reach 5,525.20.
It is true that the market hasn’t completely rebounded, but it’s on the right path. The issue most holding back the market is that the British Pound continues to trade as if it were the currency of an emerging nation like India or the Philippines, rather than a powerhouse (that is to say that it’s value has been very up and very down), but it is improving overall.
One major reason for the market’s return to normalcy is the fact that the greatest threat to global stability – a U.S. President Trump – is becoming highly unlikely. As of October 20th, U.S. polls are showing that Trump only has a 13% chance of winning the Presidency, a deficit he will likely not be able to crawl back from with less than a month until America votes. Regardless of the outcome there is likely to be short term volatility.
It’s expected that U.S. Central Bank will increase interest rates in the near future. When there is an increase in interest rates there usually comes the prospect for improved growth over the long-term.
For more information, watch the below video from Shane Oliver, AMP’s Chief Economist, as he discusses the state of the market and our key takeouts above.