How you can still find value in Australia’s share market as it edges close to all-time high after employment surge
- Australian Securities Exchange benchmark S&P/ASX200 near a record high
- The share market closed less than 2 per cent below February 2020 peak of 7,197
- Investors reacted positively to better-than-expected March labour market data
The Australian share market is very close to hitting an all-time high after a surge in employment.
Airline, travel and retail stocks are set to do better in 2021 as the Australian economy recovers from the Covid recession provided state borders remained open.
The benchmark S&P/ASX200 was trading at 7,065.1 points in early Friday trade – less than 2 per cent below the record high of 7,197 points reached on February 20, 2020 shortly before the Covid lockdowns.
The market is only 1.4 per cent below the closing high of 7,162 points on that day, before shares plunged by 33 per cent in just one month.
The Australian share market is very close to hitting an all-time high after a surge in employment. The benchmark S&P/ASX200 was trading at 7,061.5 points in early Friday trade – less than 2 per cent below the record high of 7,197 points reached on February 20, 2020 shortly before the Covid lockdowns
The Australian Securities Exchange edged up 0.5 per cent on Thursday after official data showed 70,700 were created in March even though JobKeeper wage subsidies were ending – double what economists were expecting.
Australia’s jobless rate fell to 5.6 per cent, from 5.8 per cent, putting it at the lowest level since the declaration of a coronavirus pandemic a year earlier.
Wall Street finished stronger overnight, with the benchmark Dow Jones Industrial Average rising by 0.9 per cent to close at another record-high of 34,035.99 as investors paid attention to American earnings season results.
The key ASX200 reading was also 0.9 per cent firmer during the first 20 minutes of local trade.
Retail stocks like Premier Investments – the owner of Portmans, Just Jeans and kids’ store chain Smiggle – were also expected to perform well with its share price climbing 1.5 per cent to $27.05 in early trade. Pictured is a Just Jeans store in Brisbane
CommSec market analyst James Tao said airline and travel stocks like were set to do better in 2021 should state borders remain open.
Flight Centre shares were up 0.5 per cent to $17.86 on Friday morning.
‘Generally, what you’ve seen underperform in the last 12 months over 2020 will generally come through stronger,’ Mr Tao told Daily Mail Australia.
Retail stocks like Premier Investments – the owner of Portmans, Just Jeans and kids’ store chain Smiggle – were also expected to perform well with its share price climbing 1.5 per cent to $27.05 in early trade.
‘Generally, other types of retailers, more clothing types,’ Mr Tao said.
Harvey Norman did well out of the pandemic as professionals working from home updated their furniture and on Friday its share price was 1 per cent firmer at $5.68.
Mr Tao said an economic recovery would see investors start switching out of technology stocks like buy now, pay later apps Afterpay and ZipCo.
‘You’ll see the likes of those technology stocks, which did really well during 2020, probably more likely to underperform when the economy recovers,’ he said.