We are now a month into the new financial year and we still are seeing investments markets volatile and sluggish. In the financial year ending on the June 30 the Australian Share market (ASX200) was down 9.5 percent for the year, however in the 12 months until today (August 10th) it is up 6.5%. This shows not only volatility but also how selecting different periods only 6 weeks apart can give a totally different result.
Despite the ongoing weekly oscillations, the trend in equity markets since June has been broadly positive. Given the soft global macro data it looks that this uptrend is likely driven by short covering rather than fundamentals particularly in light of the fact that there has been no clear resolution or solution provided for the European crisis.
Also Australian corporate earnings and in turn share prices continue to be largely hamstrung and range bound due to: a local economy which is sluggish, a strong Australian Dollar and the impact on sectors such as retail and tourism, continued uncertainty around the stability of Europe, lack of business confidence in the local political environment and an over concentration in Australian markets on Housing, Banks and Miners all with some head winds.
I have attached a detailed report from eQR Securities, which gives some detailed analysis of the Australian Share Market . Click here for full report. If you want to discuss this or any other matter, please call me on (02) 9492 0444.