One Year On From GFC Market Lows
March 10th, 2010 by Neil Gynther
Closing Data
| Current | Change | % | |
|---|---|---|---|
| Dow Jones | 10,564.38 | 11.86 | 0.1% |
| NASDAQ | 2,340.68 | 8.47 | 0.4% |
| S P 500 | 1,140.44 | 1.94 | 0.2% |
| FTSE 100 | 5,602.30 | -4.42 | -0.1% |
| Nikkei 225 | 10,567.65 | -18.27 | -0.2% |
| ASX 200 | 4,831.00 | 10.9 | 0.2% |
| COMEX Gold - Dec 09 | 1,122.30 | -1.7 | -0.2% |
| COMEX Silver - Sep 09 | 17.338 | 0.066 | 0.4% |
| COMEX Copper - Sep 09 | 341.15 | 0.1 | 0.0% |
| WTI Spot | 81.34 | -0.12 | -0.1% |
| AUD-USD | 0.9142 | 0.0049 | 0.5% |
| Aluminium | 2,224.00 | 23 | 1.0% |
| Copper | 7,541.50 | 75 | 1.0% |
| Lead | 2,240.50 | 62.5 | 2.9% |
| Nickel | 22,550.00 | 50 | 0.2% |
| Tin | 17,550.00 | 125 | 0.7% |
| Zinc | 2,350.00 | 93 | 4.1% |
U.S. stocks rose on the anniversary of the 2009 bear-market low for the Standard & Poor's 500 Index amid speculation the economy will continue to recover from the worst contraction since the Great Depression. The S&P 500 is up 69 percent since hitting a 12-year low of 676.53 one year ago today, the biggest rally for the index since the Great Depression. The Dow Jones Industrial Average rose 11.86 points, or 0.11%, to 10564.38. It's low one year ago was 6470 which gives it a rise of 63.3%. The Australian market low was 3120.8 which gives us a rise of 54.5%.
What do we conclude from this? The Australian market rose 154% from its low of 2693 in 2003 while the Dow rose 97% from its 2002 low of 7197. So we had a much bigger rise in the last bull market. The falls from high to low were the same 54.4%. You could conclude that the Aussie market had gone far higher than the US market. I wouldn’t. I believe the Australian market, because of its immaturity, always sells off too far when the Fear Factor takes over as it did in 2002/2003 and 2008/2009. Justifiably so with the amount of unknowns around the world at the time. Markets are forward looking and I believe the US market is now pricing US stocks 12 months out whereas our market is pricing stocks for the present.
There is a lot of analysts saying that “ companies now have to increase earnings and dividends” before the share price will improve. There is no doubt that almost all of the unknowns have disappeared and world economies (most) are improving, albeit at different rates. If you believe, as I do, that the world is well and truly leaving the GFC behind and that economies will continue to improve over the next two to three years, then the Australian market is fairly priced for today and should continue to improve over the next twelve months. My prediction: 5500 by Christmas!!!
Australian equities will open the session fairly flat today with commodities losing ground over night. Oil closed the session down $0.12 or 0.15% to $81.34 a barrel, gold also found negative territory down $1.7 or 0.15% to 1122.30 an ounce.
According to two survey’s the Australian economy’s recovery is accelerating at a great pace. The ANZ bank survey on job ads indicated strong numbers in February while the National Australia Bank survey on business conditions also revealed a very solid February. In the near term, the forward indicators appear positive for more employment growth through the first half of 2010. Most sectors reported an improvement in business conditions, with mining showing a very sharp turnaround from January.
Contact your Freeman Fox Stockbroker on 07 3031 9960 or 1800 003 369 Ext 7.
Disclaimer
The material in “Market Fox” (newsletter) is of a general nature only and neither purports nor is intended to be regarded as advice. No consideration has been given or will be given to your investment objectives, financial situation or needs. The decision to invest or trade and the method selected is a personal decision and involves an inherent level of risk. Not all risks can be or will be explained in the newsletter. Previous results are no indication of future results. Actual results achieved in the market can vary considerably. The Directors and Representatives of Freeman Fox Ltd and their associates may hold securities in the companies presented.
The research made available in this newsletter is for your private use only and it is protected by applicable copyright laws and other applicable intellectual property right laws. You may not reproduce, distribute, disseminate, broadcast, sell, publish, circulate or give for free, any of the materials made available to you in this newsletter without first seeking the prior written consent of Freeman Fox Ltd.
Freeman Fox Ltd is not required to update any of the content made available in this newsletter, including but not limited to any research commentary, forecasts, recommendations or other analysis in this newsletter. Therefore, for the avoidance of any doubt, material made available in this newsletter may not be accurate after the date of publication or the date on which it is displayed in the newsletter.
To the extent permitted by law, Freeman Fox Ltd and their respective directors, officers, employees, contractors and agents disclaim all responsibility to you for any loss, liability, claim, expense (including but not limited to legal costs and resultant defence or settlement costs) or damage whatsoever, whether direct, consequential, special, incidental, punitive or indirect (including but not limited to loss of profits, trading losses and damages that result from delay, loss or inconvenience) arising out of or in connection with the content of the newsletter and/or any omissions from the content whether in contract, tort (including negligence), statute or otherwise and even if Freeman Fox Ltd has been advised of the possibility of such damage or loss.
If you require assistance in relation to your personal investment situation, contact an authorised representative of Freeman Fox Ltd.