A stronger and faster rebound than 87 and 09

Anthony Doyle

Firetrail Investments

The recovery in the Australian equity market from the lows in March has left some investors perplexed. How can equity markets be rising when the real economy has sustained so much damage? The answer of course is found in the unprecedented monetary and fiscal stimulus that has deployed since the crisis took hold, and coupled with ultra-low interest rates, has acted as a powerful technical driver of prices for risk assets like equities. Looking back to some of the most violent sell-offs in Australian equity market history - 1987 and 2009 - shows that the rally seen in the equity market in 2020 surpasses both episodes in strength and speed.

Going forward, this is a pivotal time for investors. After a 35% rally off the low, the question remains how damaging Covid-19 has been to the economy, businesses, and labour markets. After such a rapid recovery, the strength of the market rebound from the Covid-19 crash in the second quarter of 2020 will be hard to match in the third.

Head of Investment Strategy - Firetrail S3 Global Opportunities Fund
Firetrail Investments

Anthony Doyle is Head of Investment Strategy for the Firetrail S3 Global Opportunities Fund. His primary responsibilities include fundamental idea generation, portfolio analysis, and economic insights including currency and macroeconomic risk...

I would like to

Only to be used for sending genuine email enquiries to the Contributor. Livewire Markets Pty Ltd reserves its right to take any legal or other appropriate action in relation to misuse of this service.

Personal Information Collection Statement
Your personal information will be passed to the Contributor and/or its authorised service provider to assist the Contributor to contact you about your investment enquiry. They are required not to use your information for any other purpose. Our privacy policy explains how we store personal information and how you may access, correct or complain about the handling of personal information.