Dan AtkinsonIt’s a hoary old expression, but Australia’s nickname as “the lucky country” is looking particularly apt for anyone who has been invested in its stock market during the previous 12 months.
The elite Australian Securities Exchange 200 index just closed at 7,055.30. One month ago, on 13 January, it stood at 6,903.70, and six months ago on 12 August it traded at 6,590.30.
Go back 12 months, to 12 February 2019, and the index traded at 6,079.10. That was also its 12-month low point, whereas the peak was seen recently, at 7,132.70 on 22 January.
Trade Australia 200 - AU200 CFD
Coronavirus shrugged off
All the signs are that the ASX 200 is enjoying upward momentum, finding support during the past year at 6,500 and encountering muted resistance much above 7,000.
The index, compiled by US financial information giant Standard & Poor’s, comprises the cream of Australia’s publicly-quoted companies. In banking and insurance, these include Commonwealth Bank, Westpac, ANZ Banking Group Ltd and Insurance Australia. Aristocrat Leisure, the gambling machine manufacturer, is there, as are mining and resources groups Rio Tinto, Newcrest Mining and BHP Billiton Ltd.
The Australian Securities Exchange has its own listing.
Shares seem to have shrugged off fears that Australia’s economy could be adversely affected by the coronavirus as investors and traders focus instead on the solid performance of the country’s economy. In its most recent Article IV health check, in February 2019, the International Monetary Fund (IMF) noted: “Australia has advanced further in its economic rebalancing after the end of the mining investment boom of the 2000s. Economic growth picked up to rates above that of potential output in the first half of 2018, with solid private and public consumption and residential investment more than offsetting the drag from delays in public investment plans and drought.”
Coronavirus affects markets
It added: “The fiscal policy stance has been supportive, with increased infrastructure spending. The Commonwealth [federal] government deficit has narrowed to 0.3% of GDP [gross domestic product] and should move into surplus in 2019-2020.”
Infrastructure projects boost growth outlook
In its economic and fiscal outlook for the mid-point of the 2019-2020 financial year, the XXX wrote: “Australia’s economy continues to show resilience in the face of weak momentum in the global economy, as well as domestic challenges such as the devastating effects of drought and bushfires.”
It added: The government has worked with the states and territories to identify transport infrastructure projects where delivery could be accelerated in order for the benefits to commuters, freight, and safety to be realised sooner.”
Furthermore: “There are currently 130 major projects under construction funded by the Australian government. These projects are expected to support 85,000 direct and indirect jobs over their lifetimes. The projects are improving road safety, addressing congestion in our cities, and better connecting people and places.”
Australia remains a major commodity exporter, both of food and of resources including gold, uranium, coal, natural gas and copper. For many years, it was said that trading the Australian dollar was a proxy for trading commodities, especially gold.
