Shareswatch Australia

Since mid 2012 the Australian stock market has been on a roll with the ASX All Ords & S&P/ASX 200 both closing today above 5100 points as the bull market continues. When I last looked at a few 52 week high and low stock prices the All Ords/ASX 200 were around 4300 so not surprisingly most stocks are now trading much higher and investors generally should be a happier lot than they were back then. However some stocks have actually fared relatively poorly since October 2011 and this may help us understand what might be moving the stock market at the moment.

WorleyParsons Ltd (ASX: WOR), in line with a recent theme, announced–on the same day it revealed results for the first half of fiscal 2013–a new contract award, this one to provide engineering services at the Fort Hills oil sands project. The work, which will begin immediately, will generate AUD140 million of revenue for WorleyParsons. Fort Hills is jointly owned by Suncor Energy Inc (TSX: SU, NYSE: SU), Total SA (France: FP, NYSE: TOT) and Teck Resources Ltd (TSX: TCK/B, NYSE: TCK).

In 2012 the Australian stock market finished the year higher with the ASX All Ordinaries Index posting a gain of around 12% to close at 4663.30 points.  Unsurprisingly much of the financial media excitedly churned out headlines suggesting stocks were soaring and many commentators focused on the annual rally being the best since 2009.  However if we look past the nonsensical rambling of much of the mainstream media the reality is  that All Ords has in reality simply moved back up to a level below where it finished at the end of 2009 and is still way below the pre-GFC market high.

Finally it seems the Reserve Bank of Australia and Treasury have had to accept that the mining boom has peaked or is peaking, which is something I have been talking about on this site for some years.  However the RBA, Treasury and Gillard Government all still appear to be relatively upbeat about the outlook for the Australian economy next year which is surprising,  since I don’t see a lot to be optimistic about as I review the stock market, housing market or a few other economic indicators.

In the last 12 months, shares of the Australian S&P/ASX 300 healthcare index (comprising 22 companies) have risen faster than their counterparts in the industrials and energy sectors. While this is in part caused by the downturn in the commodity markets as the world grapples with the European debt crisis and a slowdown in China, the healthcare group, notoriously a defensive sector, has also shown resilience despite challenging market conditions.

As we enter a new financial year it’s a good time to step back and look at some global economic indicators to try and get a grasp on any trends that might be emerging. Are there some signs of economic life out there or any hints of a global economic recovery that might help stock market investors some hope for the second half of 2012?

Over the last few months it has been quite remarkable to witness how the believers in Ken Henry’s ‘Golden Age’ have started to sound a little downbeat as the economic slowdown in China can no longer be ignored.  Therefore it seems like an appropriate time to try and assess what impact this slowdown is having (and may have) on the Australian economy and review the charts for a few important economic indicators.

Australian stocks seem to be enjoying a broad rally today and I suspect the mainstream financial media will churn out bullish sounding headlines when the market closes.  But if we step back and review a few charts it’s pretty clear that the Australian stock market is stuck in a rut and I don’t see it breaking free any time soon.

Almost daily the mainstream finance & business media churn out headlines regarding the stock market that would imply that stocks are either surging to new highs or falling to new lows.  The truth however is much more boring and so today I will try and have an emotion-free look at what the S&P/ASX 200 Index has been doing over the last few years & months.

An extended stock market market downturn such as the one we are experiencing now provides long term investors with an opportunity to gauge how well companies have been able to deal with harsh economic conditions.  So today let’s have a look at four consumer spending related Australian listed companies and see how they have fared over the last five years.

The Australian stock market is still a long way below the last market high reached in 2007 and so I can’t help wondering when we might see the ASX All Ordinaries reach a new market high.  Perhaps it will just be a few years time before the market recovers lost ground, or maybe it’s going to be a long wait before share market investors see stocks once again post gains year after year.

At the start of this year I had a somewhat bearish view of how the Australian stock market would perform during 2011 but the slump over the last few months has caught me by surprise.  Even stocks in the mining sector are being dragged down by global economic concerns at the moment and I don’t expect things to improve much this year.

It has been quite some time since I have looked at the Shareswatch Random portfolio of Australian stocks simply because the Australian stock market has been basically going nowhere for a year or more. So it will be interesting now to see how this collection of S&P/ASX stocks has been tracking to determine if it is tracking the performance of the ASX 200 Index.

Over the last few weeks the tragic events in Japan and the political unrest in the Middle East have shown just how fragile the Australian stock market is. Investors appear ready to move quickly out of shares and shift funds to less riskier assets when they sense trouble. This suggests to me, that people don’t quite believe that the Australian economy is as robust as many market commentators would have us believe.

Fosters Group Limited (ASX:FGL) is a blue-chip ASX-listed Australian beverage company with a wide range of brands covering beer, wine, spirits and ciders.  Over the last few years the company has faced a number of challenges and is now in the process of trying to improve it’s underlying business and deliver better value for shareholders.

Now that 2010 is behind us, let’s look at some stock market charts for last year and see if we can pick up any trends that might be of some use  as 2011 unfolds. Do the charts reflect a booming Australian economy and set the scene for a bull market in 2011? Or should we be a little more cautious?