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There are a couple of statistics to look at, since 9 March 2009: (comparisons are in domestic currencies)
The yearly breakdowns are also interesting:
The S&P in 2009 was +23% the ASX +30.8%,
- 2010 S&P +12.8%, the ASX -2.6%
- 2011 S&P 0%, the ASX -14.5%
- 2012 S&P 13.4%, the ASX 14.6%
- 2013 S&P 29.6%, the ASX 15.1%
- 2014 S&P 11.4%, the ASX 1.1%
It’s easy to see why the ASX has lagged the S&P; it has never recovered from the China slowdown in 2011.
The interesting situation for the S&P is that in its 150 plus year history, it has never had a seven-year bull market, pulling back each time it has gotten within striking distance. This is why several market commentators are getting nervous about the direction of the US market in 2015, and why Friday’s reaction to the possibility of rate rises is likely to spell the end to the bull market when they do eventually move.
The ASX is also in an interesting situation; the translation from a mining economy to a service-based economy is still taking shape, however the fact that the financial sector is the best performing space since the 2009 low (+152% or 297% on a total return basis) is no surprise. However, on an individual stock basis, mining stocks still dominate.
Sirius Resources has added 25,172% in six years, Northern Star (now the second largest gold play in Australia) has added +13,700% and Sandfire Resources +7,718%. Federation Centres is the only non-mining play to break the mining stranglehold on the top spots, with 11,870% increase since the 2009 market low.
The ASX is also facing a central bank headache; the news out of the US on Friday has certainly sent shock waves through all global markets, as rate rises from the Fed build momentum. The interesting question for the RBA is with the USD appreciating does the AUD decline give the RBA room to wait on further cuts?
Does the AUD decline give the RBA room to wait on further cuts? It has clearly signalled concern around the housing market, despite the fact that wages and the general economy are lagging. Will the hold in rate cuts see the yield trade unwind further? The reaction at the March RBA meeting suggests that this is a real possibility.
We are currently calling the ASX up 14 points to 5835, as some stability in the US markets return as rate hike threats dissipate for now. The ASX is also back to full volume strength, with three states back from public holidays.