The Australian market now sits 12% below its 2020 starting level after what has been a tumultuous year.

Over the past week, we have witnessed a sharp pullback in the US tech sector. The NASDAQ index corrected 10% over the course of one week, which is small in the context of the tech rally, but still 33% higher than 12 months ago. Is the sharp correction a sign of a bubble about to pop, or just a healthy correction within an uptrend?

The US Federal Reserve recently announced an important change in its framework to achieve its mandate of “promoting maximum employment and stable prices”. The Fed will now be targeting an inflation rate of 2% on average over time, permitting periods of overshooting 2% to make up for previous undershoots.

As we call full time on the Australian earnings season and share our final scorecard —a pass—we look ahead to what could be a game-changing 6 months for equity markets. While the timing is still uncertain (3-6 months away from Phase III results), if defined by the discovery of a COVID-19 vaccine and the broad reopening of economies there is potential for a considerable lift and rotation within equity markets, with more cyclical sectors like resources, banks, and selected industrials likely to perform strongly under this scenario.

Conviction Insights represents our highest conviction calls from across our coverage universe. With the Conviction Insights line-up unchanged this month, we take the opportunity to reiterate the primary criteria on which we assess stocks for inclusion:

Global equities have had a strong rebound led by a remarkable performance from the US share market. US equities (S&P500) are now above their pre-COVID-19 February highs with a trough to peak rebound of 50% in just over 5 months.

The fixed interest portion of diversified portfolios has traditionally been used to dampen the volatility of risk assets and optimise the risk/return efficiency of portfolios.

Wilsons was pleased to act as Sole Lead Manager to 5G Networks Limited’s (5GN:ASX) recent institutional placement to raise approximately $18.2m. The funds raised will provide the company with the flexibility to grow its fibre network, pursue M&A opportunities and continue to implement its organic growth strategy.