ROOT
Why are markets rallying?
Australian shares have rallied to their best month since 1988, following 21 per cent falls in the month of March, as investors react to fiscal and monetary support.
Why are markets rallying?
Australian shares have rallied to their best month since 1988, following 21 per cent falls in the month of March, as investors react to fiscal and monetary support.
The message of “whatever it takes and more” from central banks around the world and lessons learnt from the previous crisis has led to a strong rebound in the market, which just two months ago hit a record high.
The All Ords has risen by 8.8 per cent during the month of April, following a 2.4 per cent rally on Thursday, taking back some of the losses for investors in March.
Fidelity International’s cross asset investment specialist, Anthony Doyle, believes the unprecedented fiscal and monetary response is causing markets to rally despite facing headwinds.
“Both professional and retail investors are perplexed as to how markets are rallying as we are facing an economic shock that is the worst since the great depression.”
“Well, the big reason is this technically liquidity and flow of funds we are seeing,” Mr Doyle said.
However, the fund manager believes investors should take caution despite the recent market rally.
“I would be [in a] more conservatively position. I think there are significant headwinds in the short term, and ultimately fundamentals will have a dampening effect on increases in risk assets over the course of the next 12 to 18 months.
“As we start to see on the corporate side earnings revisions, earning downgrades, as we see dividends being cut or stopped or entirely, as we see the true health of many companies balance sheet around the globe and domestically, I think this could shock the investment community, and it could see further declines in equity markets,” Mr Doyle explained.
The fund manager also believes that when investors read the broader economic news and see the impact globally the virus is having on economies, investors could change their position.
“Equally, when we start seeing the very bad news being printed in terms of the real economy, labour markets, potentially disinflation or deflation, I think that will also be very bearish for risk sentiment as well,” Mr Doyle said.
The investment manager noted these were only short-term impacts, with in the medium to long terms likely to see investors returns due to defensive assets like government bonds “never returning less”.
RELATED ARTICLES
About the author
About the author
Earn
Australian labour market shows signs of strain amid global economic shifts
In the latest economic data release, Australia's labour market is exhibiting signs of strain, despite maintaining a relatively low unemployment rate. According to Krishna Bhimavarapu, APAC Economist ...Read more
Earn
Australia’s entrepreneur boom: August 2025 breaks records with over 100,000 new ABNs
Australia is witnessing an unprecedented surge in entrepreneurship, with the latest figures revealing a record-breaking number of new business registrations in August 2025. According to the newly ...Read more
Earn
Beyond the cash rate: How affordability reshaped Australia’s property playbook in 2025
Australian buyers are less fixated on interest rates and more constrained by affordability, a pivot that is quietly rewriting strategies for banks, developers and institutional investorsRead more
Earn
Australia’s rate cut revealed: What it means for property, profits and the months ahead
The RBA’s 25-basis-point cut to 3.6% extends the easing cycle and resets the calculus for households, lenders and property operators. Expect a faster spring selling season and a sharper rate war, but ...Read more
Earn
Beyond the sticker price: decoding a property’s real value in a volatile market
As prices in several Australian cities keep defying slower growth and higher rates, the question isn’t what a property costs—it’s what it’s truly worth. Value today is a stack: cash flows, replacement ...Read more
Earn
Cohorts, credits and competition: decoding Australia’s retirement reform consultation
Can a $3.9 trillion super system finally crack the ‘last mile’ of retirement? Canberra’s consultation on cohort-based retirement solutions aims to move beyond accumulation-era thinking, with ...Read more
Earn
Australian employment data shows mixed signals as full-time jobs rise despite overall decline
Australia's employment landscape presented mixed signals in May, with overall employment declining despite a strong rise in full-time positions, according to analysis of the latest Labour Force dataRead more
Earn
Millennials face 'generational squeeze' as most vulnerable group in retirement
Millennials will be the most vulnerable demographic to face the "generational squeeze" in retirement, caught between supporting elderly parents and adult children while funding their own later years, ...Read more
Earn
Australian labour market shows signs of strain amid global economic shifts
In the latest economic data release, Australia's labour market is exhibiting signs of strain, despite maintaining a relatively low unemployment rate. According to Krishna Bhimavarapu, APAC Economist ...Read more
Earn
Australia’s entrepreneur boom: August 2025 breaks records with over 100,000 new ABNs
Australia is witnessing an unprecedented surge in entrepreneurship, with the latest figures revealing a record-breaking number of new business registrations in August 2025. According to the newly ...Read more
Earn
Beyond the cash rate: How affordability reshaped Australia’s property playbook in 2025
Australian buyers are less fixated on interest rates and more constrained by affordability, a pivot that is quietly rewriting strategies for banks, developers and institutional investorsRead more
Earn
Australia’s rate cut revealed: What it means for property, profits and the months ahead
The RBA’s 25-basis-point cut to 3.6% extends the easing cycle and resets the calculus for households, lenders and property operators. Expect a faster spring selling season and a sharper rate war, but ...Read more
Earn
Beyond the sticker price: decoding a property’s real value in a volatile market
As prices in several Australian cities keep defying slower growth and higher rates, the question isn’t what a property costs—it’s what it’s truly worth. Value today is a stack: cash flows, replacement ...Read more
Earn
Cohorts, credits and competition: decoding Australia’s retirement reform consultation
Can a $3.9 trillion super system finally crack the ‘last mile’ of retirement? Canberra’s consultation on cohort-based retirement solutions aims to move beyond accumulation-era thinking, with ...Read more
Earn
Australian employment data shows mixed signals as full-time jobs rise despite overall decline
Australia's employment landscape presented mixed signals in May, with overall employment declining despite a strong rise in full-time positions, according to analysis of the latest Labour Force dataRead more
Earn
Millennials face 'generational squeeze' as most vulnerable group in retirement
Millennials will be the most vulnerable demographic to face the "generational squeeze" in retirement, caught between supporting elderly parents and adult children while funding their own later years, ...Read more
