Motley Fool Australia

Are ASX 200 shares set to climb 15% higher in 2021?

asx share price rebound represented by wooden blocks spelling rebound with coins on top
Image source: Getty Images

ASX 200 shares have been up and down in the past year. The S&P/ASX 200 Index (ASX: XJO) plummeted lower in the March 2020 bear market before finishing with a near-record December quarter performance.

According to an article in the Australian Financial Review (AFR), one market strategist is tipping up to 15 per cent gains for Aussie shares in 2021.

Where are ASX 200 shares headed in 2021?

Market strategist UBS is tipping the benchmark Aussie index could climb to 7,600 points, up 15.4% on current levels.

A strong public health response to the coronavirus pandemic has laid the platform for more gains. That, alongside a rotation towards value shares, could help boost ASX 200 shares higher this year.

JP Morgan’s Jason Steed was also bullish on equities for 2021. Mr Steed cited high levels of monetary and fiscal support, alongside vaccine deployment, are likely to support earnings.

Key macro drivers include robust growth from China and a revised outlook for government stimulus in the US.

UBS is tipping 15 per cent growth in forward earnings per share (EPS) to bring that back to pre-pandemic levels. MST Marquee strategist Hasan Tevfik told the AFR that 2021 was going to be more of an “earnings-driven market”. 

Rising bond yields could mean higher discount rates and therefore lower share valuations. Credit Suisse’s Damien Boey suggested higher yields could mean fewer people rolling into equities thinking that they have no other alternative in a low-rate environment.

Foolish takeaway

2020 was a volatile year for ASX 200 shares with the benchmark index down 4.0% in the last 12 months. Stand out performers like Afterpay Ltd (ASX: APT) and Fortescue Metals Group Limited (ASX: FMG) helped to push the index higher.

It remains to be seen which top shares are set to propel Aussie share values higher this year. Technology and Resources shares have been hot in recent months with all eyes on market movements in January.

Where to invest $1,000 right now

When investing expert Scott Phillips has a stock tip, it can pay to listen. After all, the flagship Motley Fool Share Advisor newsletter he has run for more than eight years has provided thousands of paying members with stock picks that have doubled, tripled or even more.*

Scott just revealed what he believes are the five best ASX stocks for investors to buy right now. These stocks are trading at dirt-cheap prices and Scott thinks they are great buys right now.

*Returns as of June 30th

Motley Fool contributor Ken Hall has no position in any of the stocks mentioned. The Motley Fool Australia owns shares of AFTERPAY T FPO. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Bruce Jackson.

Related Articles…