Good gains tipped for new year
The benchmark S&P/ASX 200 Index climbed 17.3 per cent in the year to June 30, marking the steepest financial year climb since 2006-07.
Despite a roller-coaster ride last week, the gains of 2012-13 were the third fastest for the Australian market since 1987.
Stockbroking firm Lonsec's senior client adviser, Michael Heffernan, said the Australian market was likely to expand by 15 to 20 per cent in the new year as interest rates stayed low, an election was held and European economies improved.
"We'll be travelling in a pretty moderately volatile way ... over the next few months but I'm more positive about the year as a whole," he said.
Mr Heffernan is expecting the local market to have a subdued start on Monday, after minor losses on Wall Street on Friday, at the end of a three-day rally.
"At the end of the day, we might finish in front," he said.
The Dow Jones Industrial Average lost 0.76 per cent as the broad-based S&P 500 shed 0.43 per cent.
Investors are keeping their eyes on the Reserve Bank's July board meeting on Tuesday, with most economists expecting the cash rate to stay at a record low of 2.75 per cent.
"There's an even chance of a rate cut, if not then, then in August," Mr Heffernan said.
A day after the RBA board meeting, governor Glenn Stevens is addressing an Economic Society of Australia business luncheon in Brisbane. His deputy, Philip Lowe, is speaking to a global financial stability conference in Sydney on Thursday.
Frequently Asked Questions about this Article…
The S&P/ASX 200 climbed 17.3% in the year to June 30, the strongest financial-year gain since 2006–07. For everyday investors, that suggests the Australian sharemarket finished the year in a healthy position, though past strong returns don’t guarantee future performance.
Lonsec senior client adviser Michael Heffernan pointed to low interest rates, the presence of an election, and improving European economies as reasons the local market could expand—he estimated a 15–20% rise over the new year if those conditions persist.
Yes. The article notes expectations of moderately volatile trading over the coming months despite a positive view for the year as a whole, meaning short-term ups and downs are likely even if annual returns look favourable.
The piece said the local market was likely to have a subdued start after minor losses on Wall Street; specifically the Dow Jones fell 0.76% and the S&P 500 shed 0.43%, which can dampen sentiment in Australia at the open.
Investors are focused on the RBA’s July board meeting for guidance on the cash rate. Most economists expected the rate to stay at a record low of 2.75%, and there was talk of an even chance of a rate cut in July or August—moves that could influence borrowing costs and share valuations.
A cut in the cash rate typically lowers borrowing costs and can encourage investment in equities, supporting sharemarket gains. The article notes that low interest rates were a key reason analysts were optimistic about market growth in the new year.
RBA governor Glenn Stevens was due to address an Economic Society of Australia business luncheon in Brisbane, and deputy Philip Lowe was scheduled to speak at a global financial stability conference in Sydney—events investors watch for insights on monetary policy and economic outlook.
Yes. The 2012–13 gains were described as the third fastest for the Australian market since 1987, underscoring how notable the recent rally has been compared with historical records.
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