Will the share market trade lower?

Through the past couple years, investors have benefited from a share market that seemed to know no bounds. That just keep reaching one new high after another.

So, while I often discussed the fact at some point the local market would have to draw breath, it’s still disappointing when it happens and we face a period like the past 6 months where the market just moves sideways.

For most clients, the pain has been muted by the strong performance of BHP and Rio Tinto, whose share prices have traded much higher on the back of strong copper returns.

Nonetheless, numerous sectors are down by more than 20%, dragged down by fears interest rates and inflation will continue to rise, and that domestic governments of all persuasions will just keep spending money.

The technology sector, once the wild child of the local share market is down by some 27%. Falls were led by the software giant xero’s share price collapsing by 64%, while WiseTech is down 53% and TechnologyOne is down 30%.

The health care sector has also fallen 37% lower dragged down by falls in the share price of the following medical stalwarts - CSL down 50%, Cochlear down 52% and Pro Medicus down some 33%.

While much of this is simply due to Donald Trump in the US and the arbitrary nature of the tariffs he has imposed on medical manufacturers, these companies have been buffeted by domestic economic factors like the rest of the market.

Finally, the upheavals in commodity prices for so-called minerals of the future such as lithium and uranium have caused chaos among many miners. Liontown is down 20%, Iluka down 7.5% and the stalwart of the mining industry Wesfarmers, is down some 20%.

Times like these simply prove the merits of the so-called retirees’ best friends. The big banks, the big miners and the stalwarts of the market such as Telstra and Medicare.

While their share prices may have drifted lower, it is nothing like the carnage being witnessed on the broader market and we all know that whatever happens, they will come out the other side.