Released yesterday, the WAM Research half-yearly profit report included an equities outlook for 2014 that noted a majority of the anticipated economic recovery was already priced in to Australian and global equities.
“Over the last 12 to 18 months, company price to earnings ratios have expanded significantly while earnings growth has remained anaemic,” the report said.
“We will be looking closely for signs of a sustained improvement in company earnings.”
However, in the medium to long term, WAM Research is bullish on equities, dependent on an increase in economic activity resulting from record low interest rates, according to the report.
“Overall, we are optimistic in our outlook for the Australian economy and believe it is in a better position than six months ago due to a combination of factors,” the report said.
“Record-low interest rates, low unemployment and wages growth all bode well for consumers and a boost in discretionary spending.”
Unemployment rates held steady at 5.8 in December while interest rates remain at 2.5 per cent.
