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. AAP
Frequently Asked Questions about this Article…
The S&P/ASX 200 climbed 17.3% in the year to June 30, marking the steepest financial-year rise since 2006–07. For everyday investors, that means the sharemarket entered the new financial year in a healthy position after unusually strong gains.
Yes. Despite some recent volatility, the gains in 2012–13 were the third fastest for the Australian market since 1987, underlining how strong that financial year was compared with long‑term history.
Michael Heffernan expects the local market to expand about 15–20% in the new year, citing continued low interest rates, the impact of an election and improved European economies. He anticipates moderately volatile trading in the months ahead but is positive about the year as a whole.
Investors are focused on the RBA’s July board meeting, with most economists expecting the cash rate to stay at a record low of 2.75%. The article notes there’s an even chance of a rate cut (possibly in August), so the RBA’s decision and commentary could influence market direction and sentiment.
The Dow Jones fell about 0.76% and the S&P 500 shed roughly 0.43% after a three‑day rally. Michael Heffernan expected the Australian market to have a subdued start on Monday following those minor Wall Street losses, though he suggested the market might still finish ahead overall.
The article links low interest rates to stronger sharemarket performance: Heffernan says low rates are one reason he expects 15–20% market expansion next year. Lower cash rates generally reduce borrowing costs and can support asset prices, which investors watch closely.
The article highlights an expectation of 'moderately volatile' conditions over the next few months, even as commentators remain positive about the full year. That suggests investors should be prepared for short‑term swings while keeping a longer‑term view.
RBA governor Glenn Stevens is scheduled to speak at an Economic Society of Australia luncheon in Brisbane, and deputy governor Philip Lowe will speak at a global financial stability conference in Sydney. Their public remarks can provide insight into RBA thinking on interest rates and financial stability, which investors monitor closely.
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