According to SSGA’s head of active quantitative equity in Asia Pacific, Olivia Engel, the Australian sharemarket’s current bout of volatility after a strong two-month rally is not unexpected and likely to be the first in a series of market spikes this year.
“At the end of last year we set an expectation for 2015 of continued spikes in volatility, and stops and starts to earnings and prices,” Ms Engel says in the latest update (written at the start of March). “We aren’t expecting a bad year, but a volatile one.”
She says market uncertainty really started to pick up in the final quarter of 2014 and since September 30, there have been some major spikes in volatility, along with large market drawdowns during the period.
Despite recent weakness, the S&P/ASX 300 Accumulation Index is still up 8.45 percent (as of yesterday) since the start of 2015, compared to a total return in 2014 of 5.3 per cent. Ms Engel attributes the generally strong start to the year to global macroeconomic factors rather than any issues specific to Australian stocks or the local economy.
The main local beneficiaries have been resources and materials shares, which were buoyed by the recovery in oil prices and a general rally in risky assets around the world.
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