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Note from the MD: Optimism returns as global economic growth looks set to improve

June 16, 2021

Note from the MD: Optimism returns as global economic growth looks set to improve

As we near the halfway mark for yet another year, the outlook for 2021 continues to improve. The latest development comes from ratings house Fitch, which today raised their guidance for global economic growth.

As we near the halfway mark for yet another year, the outlook for 2021 continues to improve. The latest development comes from ratings house Fitch, which today raised their guidance for global economic growth.

The influential agency now expects global economies will expand by 6.3% this year – 0.2% higher than its previous estimates.

One investor who is always on the hunt for new opportunities is Nick Guidera, a portfolio manager at Eley Griffiths – who focuses on small and emerging companies.

Nick will be joining us this Friday 18th June at 12pm (AEST) for “The Insider: Meet the Fund Manager” webcast, where he’ll share his three favourite stocks, why he’s cautious on certain COVID ‘winners’, and the market trends he believes will drive prices in the year ahead. To join us for this session, click here.

That improvement is expected to be somewhat tempered by slowing consumer price increases in the years ahead.

Nevertheless it’s a promising sign, and together with the latest consumer confidence prints (showing optimism is returning to Australian households) paints an altogether rosier picture than we had just a few weeks ago.

We also saw the benchmark ASX 200 index (ASX: XJO) break briefly above 7,400 points around lunchtime today, before easing back a bit to end the day at 7,386.2 (up 0.09%).

Mining stocks proved something of a weight on the markets today with the ASX 300 Metals and Mining index (ASX: AXMM) digging itself nearly 2% lower than it opened at.

Fortescue Metals (ASX: FMG) and BHP (ASX: BHP) declined 1.58% and 1.56% respectively, while Rio Tinto (ASX: RIO) eased back 0.42%

In the smaller end of town, things were relatively flat – the ASX Small Ordinaries index (ASX: XSO) traded more-or-less sideways for most of the day despite a few big swings (both up and down) early in the session.

It closed 0.25% down

Here, too, miners dragged on the index – six of the ten worst-performers for the day were all in the resources sector: Nickel Mines (ASX: NIC), Coronado Global Resources (ASX: CRN), Red 5 (ASX: RED), Sandfire Resources (ASX: SFR), Galaxy Resources (ASX: GXY), and Orocobre (ASX: ORE). 

All six lost between 4.33% and 6.37%.

The top end of the index was instead dominated by companies linked to health and aged care – medical technology company AVITA (ASX: AVH) was the best performer with a 12.03% gain, while biotech company Telix Pharmaceuticals (ASX: TLX) notched up a gain of 6.37% and aged care facility manager Lifestyle Communities (ASX: LIC) put on 6.85%.

Lifestyle Communities was recently featured in one of Reach Markets’ fortnightly The Insider: Meet the Fund Manager webcasts where Pengana Capital Group senior fund manager Ed Prendergast cited it as one of his current three favourite stocks.

You can hear more about that here.

 


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