Will May make eight straight months of gains for the ASX 200?

The ASX 200 is edging higher today, with May potentially shaping up to deliver the eighth straight month of gains for the index.

| More on:
A boy looks up and points his fingers to the sky in celebration pose.

Image source: Getty Images

You’re reading a free article with opinions that may differ from The Motley Fool’s Premium Investing Services. Become a Motley Fool member today to get instant access to our top analyst recommendations, in-depth research, investing resources, and more. Learn More

The S&P/ASX 200 Index (ASX: XJO) is edging higher today, up 0.45% in afternoon trading. With a small gain posted by yesterday's closing bell as well, the ASX 200 is now up 0.64% for the first 2 trading days of May.

If the ASX 200 can maintain its positive trajectory for the month, May will mark 8 straight months of gains for the index.

April saw the ASX 200 finish up 3.5% for the month. That was its best performance since November, when the index gained a stellar 10%.

Now in these days of monster overnight gains — and some rapid losses — from the likes of GameStop Corp. (NYSE: GME) and Bitcoin (CRYPTO: BTC), a 3.5% gain over the month may not grab many headlines.

But remember, we're talking about the 200 largest listed companies in Australia here. And with the investment philosophy of 'slow and steady wins the race' in mind, I'm happy to take a 3.5% monthly gain from the Aussie blue chips populating the ASX 200.

Aussie economy picking up speed

As the Reserve Bank of Australia (RBA) will highlight today, the Australian economy has performed better than government forecasts. Inflation remains low (meaning interest rates will too), unemployment levels are lower than expected, and the budget deficit is looking to come in at some $31 billion less than expected back in December. Though it's still a doozy!

Along with increased consumer confidence, the rollout of the COVID-19 vaccines and rising house prices, Australia's financial sector looks to be in far stronger shape than most analysts were predicting as 2020 ground to an end.

And that, along with booming commodity prices, could send the ASX 200 on to another month of gains in May.

Soaring commodity prices help boost ASX 200

The new commodity super cycle you may have read about looks to be well and truly underway.

Prices for metals from iron ore to copper are sitting at all-time or multi-year highs, while crude oil and even coal have come roaring back from their post pandemic lows.

If this continues pace, as many analysts predict, it should continue to offer a welcome tailwind for commodity shares.

And with the materials sector making up some 19% of the ASX 200 (as at 21 December), May could well usher in an 8th consecutive month of gains for the index. 

Motley Fool contributor Bernd Struben has no position in any of the stocks mentioned. The Motley Fool Australia has no position in any of the stocks mentioned. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Bruce Jackson.

More on Share Market News

Ten smiling business people wave to the camera after receiving some winning company news.
Share Gainers

Here are the top 10 ASX 200 shares today

ASX investors enjoyed a strong recovery day this Tuesday.

Read more »

Person pointing finger on on an increasing graph which represents a rising share price.
Broker Notes

These ASX shares could rise 20% to 30%

Big returns could be on the cards for buyers of these shares according to analysts.

Read more »

Modern accountant woman in a light business suit in modern green office with documents and laptop.
Broker Notes

All about the momentum: Which ASX 200 stocks does Macquarie currently favour?

These stocks have strong positive momentum.

Read more »

A graphic showing a businessman running up a white upwards rising arrow symbolising the soaring Magellan share price today
Share Gainers

CBA shares hit another all-time high. Can they surpass $200 in 2025?

CBA shares have a tailwind pushing up their price that has nothing directly to do with the bank's business performance.

Read more »

a young woman raises her hands in joyful celebration as she sits at her computer in a home environment.
Share Gainers

Why Alliance Aviation, Cogstate, Collins Foods, and Findi shares are roaring higher today

These shares are having a good session on Tuesday. Let's find out why.

Read more »

Frustrated stock trader screaming while looking at mobile phone, symbolising a falling share price.
Share Fallers

Why APA, DroneShield, EOS, and Woodside shares are tumbling today

These shares are missing out on the good times on Tuesday.

Read more »

Woman checking out new iPads.
Broker Notes

'Lock in profits at these levels': Expert's verdict on 2 ASX 200 shares

Tony Locantro of Alto Capital says it might be time to take profits on these high-flying ASX 200 shares.

Read more »

asx share price growth represented by hand holding hourglass surrounded by dollar signs
Opinions

'Patience isn't passive': Expert reveals 2 ASX shares his team won and lost on

They say patience is a virtue. This asset manager says it can also determine your investment success.

Read more »