Are equities in oasis October, following sour September?


Aussie investors are increasingly optimistic that the global economy is set to continue strengthening.

This has been majorly influenced by the most recent quarterly earnings in the US producing better than expected results from some of the world's biggest companies, which has also supported the US share market rising for two straight weeks.

Additionally, business confidence has boosted off the back of restrictions easing across Australia, and there has also been a rise in new home sales.

westpac share buyback

With all this in mind, here are three key themes to keep across in the next few weeks.

October US earnings will be a focus

The third-quarter company earnings in the US is currently underway. Investors are keen to know the outlooks for 2022 from some of the biggest companies in the world and find out when supply disruptions are likely to end.

Of the S&P500 companies reporting, earnings are tipped to be 28% higher than the same quarter a year ago, which is more than double the five-year average earnings growth rate according to FactSet.

In saying this, if companies report fewer earnings growth than expected, equities might be at risk of another pullback.

Global economic growth in the spotlight

The global economy is still ticking along especially when compared to growth last year.

Recently, the International Monetary Fund (IMF) updated their economic forecasts - expecting the global economy to grow at 5.9% this year and 4.9% next year. It expects the US to grow 6%, China's economy to grow 8%, and Australia to grow 5.3% in 2021. Although these growth rates are slimmer than July's forecast due to supply distributions from the pandemic, the IMF says these are still reasonable rates of growth.

What are the impacts for investors? Sectors linked to the economic recovery (financials, for example) will likely perform strongly given employment levels and company profits will rise.

In the financials sector, keep your eye on National Australia Bank (NAB), and Westpac (WBC). NAB appears to be gaining market share in lending, while WBC may be set to do a share buyback and could return $5 billion to shareholders.

The rise of online investment platforms

Investors are increasingly selling stocks in investment management firms and backing online investment financial platforms instead.

Platinum (PTM) shares are down 15% this month, after businesswoman Judith Neilson sold $291 million of shares, while PTM has also experienced further falls in funds under management.

Meanwhile, investors have been backing fintech investment platforms in droves. Netwealth (NWL) shares are up 21% this month and HUB24 (HUB) is up 13%. Both NWL and HUB reported record flows into their respective investment platforms and were upgraded by several investment houses.

There's also an expectation the fintech investment platform industry will grow from $1 trillion to $1.8 trillion by 2040. Further, Credit Suisse estimates NWL will have 14% of the market and HUB will have about 15%.

There's lots to consider this month - stay safe and happy investing.

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Jessica Amir is a market strategist with trading platform moomoo, a Tencent-backed Nasdaq-listed company committed to reimagining the online share trading experience for Australians through AI-powered innovation. She joined the group with 17 years of experience in markets.  Given she has had the benefit of working as an adviser, market analyst and TV and radio journalist, she knows what investors need to hear. She worked with Saxo, Bell Direct and Sequoia Financial Group (SEQ) in the investment world and held financial advising roles with AMP and CBA. She also worked as a journalist with the likes of ABC, Nine and Sky News Business. She is currently studying Master's of Applied Finance and has a Graduate Diploma in Applied Finance.