Please click here to view Shane Oliver’s views on the reasons why share markets have been so resilient despite a number of worries.
Key points raised are :
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Despite lots of threats over the last 18 months share markets have proved to be remarkably resilient.
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This likely reflects a combination of: President Trump’s desire for shares to rise; economic activity data right here right now has been okay; earnings growth has been helped by the AI spending boom; the global economy is awash in excess capital looking for a home; and policy makers have become more assertive in protecting their economies.
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However, there is a danger in getting too swept along in positive market sentiment: the Iran War could flare up again; Trump will be less constrained after the mid-term elections; there is a risk that the AI boom is morphing into a bubble; inflation is proving sticky with global central banks starting to hike rates; & share market volatility is at the low end of its normal range which can be a sign of rising risk.
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So, while the strong share run could continue for a while yet investors should resist the temptation to take on more risk.
