Although trading has remained light today due to Victoria's Melbourne Cup public holiday, the S&P/ASX 200 (Index: ^AXJO) (ASX: XJO) has realised a gain of 41.7 points, or 0.76%, boosted by strong performances from materials stocks and the big four banks.
Meanwhile, the major banks have recovered some of yesterday's losses with ANZ (ASX: ANZ), NAB (ASX: NAB) and Commonwealth Bank (ASX: CBA) increasing 0.9%, 0.7% and 1%. Westpac (ASX: WBC) has also gained 0.6% after falling 1.2% yesterday, despite having announced an 8% increase in annual profit and a special dividend.
Whilst Macquarie Private Wealth division director Martin Lakos sees "speed bumps" for the market next year from US debt ceiling negotiations and an eventual tapering of the Federal Reserve's bond buying program, he also expects equities to remain strong in the lead up to Christmas.
The focus of the market for the afternoon will turn to the Reserve Bank's interest rate decision. Whilst some analysts have speculated that they could decide to cut interest rates following slightly dovish comments from Glenn Stevens last week, that scenario remains unlikely and they should be kept at their current level of 2.5%.
Although the ASX 200 is currently sitting at its highest level in five years at 5400 points, it's not too late to buy shares (although, it is more difficult to find a bargain, if you don't know where to look).