The six-year anniversary of the bull market

Today marks the six-year anniversary of the beginning of the US bull market.


There are a couple of statistics to look at, since 9 March 2009: (comparisons are in domestic currencies)

The S&P has added 205% from the close of business at the start of the bull run to the close of business today. The ASX 200 over the same time period has added ‘just’ 83%.

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.

IGA, may distribute information/research produced by its respective foreign marketing partners within the IG Group of companies pursuant to an arrangement under Regulation 32C of the Financial Advisers Regulations. Where the research is distributed in Singapore to a person who is not an Accredited Investor, Expert Investor or an Institutional Investor, IGA accepts legal responsibility for the contents of the report to such persons only to the extent required by law. Singapore recipients should contact IGA at 6390 5118 for matters arising from, or in connection with the information distributed.

This information/research prepared by IGA or IGA Group is intended for general circulation. It does not take into account the specific investment objectives, financial situation or particular needs of any particular person. You should take into account your specific investment objectives, financial situation or particular needs before making a commitment to trade, including seeking advice from an independent financial adviser regarding the suitability of the investment, under a separate engagement, as you deem fit. No representation or warranty is given as to the accuracy or completeness of this information. Consequently any person acting on it does so entirely at their own risk. In addition to the disclaimer above, the information does not contain a record of our trading prices, or an offer of, or solicitation for, a transaction in any financial instrument. Any views and opinions expressed may be changed without an update.

See important Research Disclaimer.