iInvest Eye On The Market – January 2016

Another year has come and gone and for investors and 2015 has been quite a rollercoaster ride. The year began strongly as the ASX200 rallied to a high of 5996.9, up 10.9% through to early March.

The market then ran into some resistance, unable to break through the 6000 point level. This psychological resistance level provided a barrier against further gains with the Australian stock market moving within a tight band over the next couple of months, having three more failed attempts to break through the 6000 point level.

In the end the technical resistance and global uncertainty proved too much and the ASX retreated on profit taking and a slide in commodity prices and the Aussie dollar.  The mid-year sell-off came about as the US economy continued to improve, increasing investor anticipation that a US interest rate lift-off was imminent. With investors seeing the change in rate cycle as a risk to global equities the selling ramped up with investors looking to reduce risk across portfolios.

The selling led the market to a low of 4909.5 on December 15, as the US Federal reserve commenced their December FOMC meeting, the outcome of which would actually see the first US rate rise in almost a decade. With the lift-off now underway investors became optimistic the US economy was strong enough to cope with higher rates.

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