Stock Market to Crash Again According to Experts

This year the world has been thrust into turmoil with growing fears around the full effects of the COVID-19 pandemic. Concerns are not just about our health, although understandably this is our immediate focus, but also the growing concerns among ordinary Australians around the global economic climate and how we can secure our future, not just personally but as a nation. Right now, our security and safety are being challenged and these basic physiological needs have to be met in order for everyone to move forward.

Understanding your exposure to the stock market

There is an old saying that every cloud has a silver lining but is the current situation right now really a silver lining. In my opinion, nothing gets people more motivated to change than fear and uncertainty, and you must admit COVID-19 has certainly created a lot of that. Australians are experiencing a fear of the unknown because of the unpredictable nature of the current global situation. While we can all guess, no one knows exactly where we will be in 12 months’ time and what our personal lives will look like.

In the current situation, more Australians are starting to pay attention but, more importantly, they have become motivated to ask some tough questions. I am not just talking about health-related questions but questions about where their money is invested, what they should be investing in and how safe is that investment. Over the past few months, I have been inundated with Australians asking those exact questions in addition to wanting to know how they can profit more from the stock market so they can secure an income stream if the climate does not improve.

So what questions are you asking and what answers are you getting in relation to your investments, so that you can secure your future? Because, right now, it’s important to understand your level of exposure to Australian equities, particularly if the stock market crashes again as some experts are predicting. It is far better to take positive action and be armed with a plan before something occurs rather than acting on fear, as this reduces much of the uncertainty we have been experiencing in 2020.

The one thing that is certain is that the dark clouds will continue to roll in from time to time, but the opportunity for you is how you handle them. Making a choice to pay attention and become educated, and informed with a solid plan is not only wise, it will also ensure you will be confident about what to do when this occurs. In other words, it is far better to be educated and informed before the clouds appear rather than after.

What were the best and worst performing sectors last week?

While the All Ordinaries Index was slightly bullish last week, it was far from convincing. As such, some sectors rose strongly while others did not perform that well. Consumer Staples led the way up over 4 per cent followed by Financials up almost 4 per cent, while Information Technology and Consumer Discretionary were up almost 3 per cent.

The worst performing sectors included Communication Services, which was down nearly 5 per cent followed by Utilities down around 2 per cent and Materials, which was up over 2 per cent early in the week before closing the week just in the red.

Looking at the ASX top 100 stocks, the best performers included Treasury Wines Estates up over 17 per cent, Flight Centre up almost 15 per cent, while Reliance Worldwide Corporation was up over 11 per cent. AMP, Qantas and QBE Insurance also ended the week up over 10 per cent.

The worst performers included Northern Star Resources down over 10 per cent followed by AGL Energy, Challenger and Seek, which were all down over 8 per cent.

What's next for the Australian share market?

Last Monday, the All Ordinaries Index rose 1.66 per cent and it looked as if the market would finally break out of the protracted sideways move it has been in over the past few months. While it did experience some weakness during the week, the good news is that it finally closed higher on Friday, which is the first time this has occurred in the past month.

In my previous report, I indicated that the big end of town did not appear to be overly bullish and the events of last week have not really changed my view, although, in a good sign, the market did close above 6,200 points for the first time since the first week of March.

For the Australian market to prove it is bullish, it needs stay above 6,200 points and trade above the high of 6,314 points set on 9 June. Failure to do this over the next week will indicate that the market is still in a sideways trend and that the big end of town is still not overly bullish.

For now good luck and good trading.

To watch this week’s stocks of interest, watch the video to find out more.

Dale Gillham is Chief Analyst at Wealth Within and international bestselling author of How to Beat the Managed Funds by 20%. He is also author of the award winning book Accelerate Your Wealth—It’s Your Money, Your Choice, which is available in all good book stores and online.