The Australian sharemarket’s surprising rebound isn’t over just yet – especially with the earnings season kicking off and hopes that an imminent US-Iran deal will open crucial trade routes in the Middle East.
The S&P/ASX 200 Index has reset its record high twice this week thanks to a 6 per cent surge since the start of July that has outpaced all three major indices on Wall Street and taken short sellers and fund managers by surprise after a lacklustre 12 months.
Strategists are confident that there are more gains to come in the short to medium term even if Australia’s stubborn inflation problem starts to reassert itself further down the track.
“We can push higher from here,” said Luke McMillan, head of research at Ophir. “The major overhangs to markets are still the war, and we’ve had better news this week.
“So as long as that keeps a lid on oil prices and rate hike expectations, you can get back to the fundamental story, which is the economic engine of the globe, being the US, looking pretty good.”
The sharemarket has been on a rollercoaster ride since the war broke out in the Middle East in late February that rocketed oil prices and started to affect inflation and the rate outlook.
Yet while fluctuating energy costs have driven global swings and cracks have started to appear in the glittering semiconductor trade, the Australian sharemarket’s lack of exposure to artificial intelligence and mix of companies has become a buffer for international investors.
In addition, McMillan pointed to easing fears of higher interest rates in Australia and spillover optimism from Wall Street that provided an extra boost for investor confidence.
“Then you combine that with an incredibly strong reporting season out of the US with a really high number of companies beating expectations,” McMillan notes.
Source: https://www.afr.com/markets/equity-markets/asx-s-stunning-rebound-is-no-mirage-say-market-strategists-20260806-p60lvn