Forget recent dismal performance from Australia's stockmarket – it's about to swing higher according to Morgan Stanley Wealth Management.
The S&P/ ASX 200 Index (Index: ^AXJO) (ASX: XJO) is up just 2.9% since the beginning of this year, but Morgan Stanley's Malcolm Wood has told the Australian Financial Review that there are six catalysts that could drive the sharemarket higher.
In no particular order…
- The US economy firing on all cylinders without support from the US Central Bank
- Further signs of stabilisation in China
- The Reserve Bank of Australia (RBA) cutting interest rates
- More government stimulus in Europe and Japan
- A stronger US dollar, and
- An upswing in business confidence locally
Mr Wood does note some risks that could also drag down the market including more Middle East tensions, a rising Australian dollar, a sluggish US economy and the RBA raising or hold the official cash rate at the current level.
Mr Wood says there are signs that the US economy is already improving, thanks to virtually zero interest rates, and China is making positive progress towards a successful deleveraging. Further rate cuts by the RBA to bring the stubborn Aussie dollar down and encourage the non-mining sector to grow are possible too. A lower exchange rate would also help the stock market, as would lower interest rates.
And as we wrote in this article last week, now might be the perfect time to invest in ASX-listed companies with international exposure, such as Computershare Ltd (ASX: CPU), Cochlear Limited (ASX: COH), Brambles Limited (ASX: BXB) and Ansell Limited (ASX: ANN).
So, before the Aussie dollar falls, you might also want to think about listed investment companies with portfolios of international stocks, such as Platinum Capital Limited (ASX: PMC). On the other hand, you might just want to read our special free report first! More details below…
