Leading fund manager sees good ASX buying opportunities

The Australian share market saw particularly strong gains during April, with the S&P/ASX 300 Index (ASX: XKO) up by 9.0%.

Investment fund manager Perennial commented in its latest monthly report that the ASX market rally in April was across a broad industry base, with the resources sector performing particularly strongly.

Energy, Gold and Mining Services sectors rally strongly

Energy was the best performing sector during April, up by an impressive 25%, driven by strong optimism in relation to the outlook of the oil price. Leading the charge in this sector included: Santos Ltd (ASX: STO) shares up by 44% during the month, Woodside Petroleum Limited (ASX: WPL) up by 23% and Origin Energy Ltd (ASX: ORG) up by 27%. These strong rises were on the back of a strong sell-off in the energy sector during March due to a sharp fall in demand.

Perennial noted that gold shares also performed very strongly, driven by further increases in the gold price, with Evolution Mining Ltd (ASX: EVN) shares up by 34% during April, and St Barbara Ltd (ASX: SBM) and Northern Star Resources Ltd (ASX: NST) both up by 22%. Mining services companies Perenti Global Ltd (ASX: PRN) and Seven Group Holdings Ltd (ASX: SVW) also both saw strong gains.

Early signs of a post-coronavirus recovery could provide further share price boost

The Australian Government’s quick response (and that of many other countries) to the crisis, including monetary easing and fiscal stimulus, will no doubt lessen the blow of the crisis on both the local and global economy.

Also, Perennial pointed out that it is growing increasingly more apparent that the steps taken to limit the spread of the coronavirus in Australia have been more successful than in most other developed nations. This provides Australia with the opportunity to fire up its economy sooner than most. It also positions Australia well to lead other nations in terms of this return to normal economic activity.

Further buying opportunities for long term investors

The federal government’s 3-step plan to reopen Australia last week, which aims to see the majority of Australian businesses re-opened by the end of July, will lead the path forward in this respect and I feel this could lead further share price growth in the ASX in the months ahead.

On a further positive note, with the recent share price falls since February, a significant amount of the downside in the market has now already been factored into current market prices. Also, despite the strong rally in April, there are still opportunities for long-term investors to buy quality companies at more attractive prices.

More reading

• 6 ASX shares driving the Australian gold boom
• ASX 200 up 0.8%: Big four banks push higher but Xero tumbles lower
• Why Kogan, Macquarie, Newcrest, & Santos shares are zooming higher
• Big bounce in these ASX stocks may be over before it began
• Got $2,000? Here are 2 ASX 200 energy shares to buy today

Motley Fool contributor Phil Harpur has no position in any of the stocks mentioned. The Motley Fool Australia has no position in any of the stocks mentioned. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Scott Phillips.

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