Running of the market bulls

This stock market recovery is based on sounder fundamentals than the 2007 peaks. But it has a long way to run, and by the end of 2014 a 10 per cent rise could be on the cards.

In June last year, the ASX200 stock index was faltering. It briefly dipped below 4,000 points as fears grew of a sovereign debt default in Europe, falls in commodity prices accelerated and the Chinese economy weakened with fears of a sub 7 per cent GDP growth pace gaining credence. The US economy was yet to gain traction with a recovery from the deep recession.

Domestically, the carbon tax was about to be introduced, economic growth was cooling and the government was embarking on the largest fiscal policy contraction ever recorded with a cut in real government spending of 3.1 per cent in 2012-13.

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