Market momentum
About the author:
- Author name:
- By Tom Sartor
- Job title:
- Senior Analyst
- Date posted:
- 28 June 2021, 2:30 PM
- Sectors Covered:
- Junior (Emerging) Resources, Bulk Materials
Equity valuations have traded ahead of traditional value fundamentals for some time. A flood of financial system liquidity is a clear driver, with momentum also perpetuated by the rise of ETFs (where value judgments don’t apply) and perceptions of a “whatever it takes” attitude by Central Banks to support asset values.
It’s easy to argue the market is increasingly pricing equities on relative basis, heavily influenced by momentum. Below we’ve run simple momentum screens to try to identify potential areas of risk and opportunity amid the current market, and coming into EOFY.
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Figure 1: Segment momentum trends
- Cyclicals of interest: Energy, Transport, Travel, Packaging, Transport Infra, Coal, A2 Milk
- Other: Gold, Retail REITs, Mining services, “ESG” stocks
- Vulnerable short term: Online, Retail, Metals & Mining, Housing
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Disclaimer: The information contained in this report is provided to you by Morgans Financial Limited as general advice only, and is made without consideration of an individual's relevant personal circumstances. Morgans Financial Limited ABN 49 010 669 726, its related bodies corporate, directors and officers, employees, authorised representatives and agents (“Morgans”) do not accept any liability for any loss or damage arising from or in connection with any action taken or not taken on the basis of information contained in this report, or for any errors or omissions contained within. It is recommended that any persons who wish to act upon this report consult with their Morgans investment adviser before doing so.
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