The Australian Stock Exchange has yet again recorded nothing but gains for the month of April, making the streak a 7-month long one. This is one of the longest-lasting streaks in recent history, making it a benchmark performance for the ASX and setting high expectations for the months to come.
The leading performers in the Australian market are tech giants like Nuix, with a 5.6% gain. This success of the ASX is further emphasized by the performance of foreign markets. For example, it seems like the S&P 500 index in the US is closing off the month with a 0.1% shed, indicating an overall drop in the US economy, while Australia is soaring to the top.
Another major contributor to the exponential growth is the increasing prices of commodities, giving Nickel and coal miners some room to maneuver in terms of profits. With a truly devastating financial year behind us, the Aussie business sector is slowly but effectively reviving itself to reach its previous as well as its full potential.
With such overwhelmingly positive outcomes, more and more Australian citizens become convinced that it’s a perfect time to invest in local businesses and watch the charts show nothing but green.
A particular form of investment has been rising in popularity for most Aussies, which was previously thought of as a bit lacking in attention. ISA stocks and shares have been on the rise exponentially with Aussie investors, simply due to the relative ease in terms of taxes paid and gains.
First popularized in the United Kingdom, it didn’t take long for UK best performing ISA stocks and shares to inspire Aussies to make their own versions and similarly benefit from the additional features.
Furthermore, it was observed in the UK that not only did this tendency affect the overall performance of the local stock market, but also the purchasing power of the local population. This gave way to increasing prices for commercial goods, thus earning the country a bit more income through exports as well as a relative strengthening of the GBP.
It is believed that Australia may see the same results, but it’s highly unlikely. This is because the volume that ISA stocks and shares reached in the UK are much harder to reach in Australia due to a) difference in population, b) diversity of options to invest in, and c) lack of globalization of the Aussie stock market.
Many experts fear that this type of growth is very unreliable. The main argument can very easily be seen on the S&P/ASX 200 chart. If we take a look, we can see that the current price is nearly identical to the price we had before the February 2020 crash due to COVID-19.
Many economists predict that a large majority of investors will take this chart as their primary guide to making investment decisions rather than the actual predicted performance of the market. Because from a logical standpoint, the AU market has more or less recovered all that it’s lost; therefore, in the mind of many investors, there is nothing else to gain, or that the gains that could be achieved are not worth the risk.
Therefore, it is likely for this type of growth to slow down as the days pass in the month of May. Why? Because any further growth will be setting record highs for the S&P/ASX 200, and we all know how fragile those records are.
Image courtesy of Fernanda Laufer/YouTube
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