18 April 2021
Australian shares rose 4% on a total return basis over the March quarter following a strong advance in the prior quarter as solid profit results during reporting season provided underlying market support. Sector performance was dominated by a 12% gain in Financials – we believe this divergence in value between the 4 banks has now largely closed up.
While investor sentiment has shifted strongly in favour of cyclicals, we see better opportunities in some structural growth and infrastructure stocks which have attractive valuations not seen for some time. On balance low interest rates and solid earnings momentum should be supportive of the equity market.