ASX majors head north

The major Australian indices have moved higher to enter a new range above 7100, with the previous range being identified in a previous article, at a rapid pace with plenty of space to breathe and breaking all time highs previously set. Almost catching most by surprise on the timing of the rise, the shifts in the 100s have been some of the largest adjustments compared to the indices abroad and the ASX indices themselves in recent months.

Considering the heavy weighting of commodities on the Australian markets, it has paralleled with the June 2021 rebound in oil, copper & iron ore pricing which has provided some strong tailwinds in line with other attractive investment propositions to entice overseas capital flows into Australia. The strong employment reports, current low numbers of covid-19 cases and the potential of Australian resource deposits such as uranium, nickel & lithium have caused a de-risk environment for foreign investment firms looking to Australia as a possible "safe haven" to allocate these funds into the sectors they see have tremendous growth opportunities especially in the energy space as well as the electric vehicle revolution.

(Photo by Paul Carmona/Unsplash)

Recent news of the possible merger between H. Soul Pattinson and Co & Milton Corporation has sent both financial listings soaring, which is welcomed news after a possible rotation back into some sold off Australian tech listings. The financial sector has a common pattern that usually tracks the same movements and pace as the Australian indices through the highs & lows of the markets locally and abroad. Financial listings on the ASX were one of the lagging performers for quite some time as risk-on sentiments had returned once there was a bounce across most Australian equities after March/April 2020, demonstrating that the other sectors were firing on all cylinders and had a lot of first time investors as well as overseas interest causing the Australian dollar to surge against major currency pairings like the Euro & USD.

There is now a strong indication of an upwards channel forming on the chart since the March 2020 lows of the covid-19 bear market situation which reared it's head in the first half of 2020. The extraordinary amounts of new money from the private and public sectors(including local Australian individuals new to the market who were directly investing outside & inside their superannuation) early on in the recovery after the accelerated drop had caused the movements to jump largely outside of this channel before continuing the ascending trend.