Shareswatch Australia

Since mid last year, the Australian stock market has staged a fairly impressive rally with the ASX All Ordinaries Index moving from a decidedly bearish level of down near 4000 to a bull market level of just under 5200 points. But of late the market has slipped back which will worry some investors, while others see this a simply a pause before the rally upwards continues.

Once again it is time to dust off the crystal ball, stick a finger in the air and toss some chicken bones over my shoulder in a vain attempt to forecast what the Australian stock market will do in 2013.  Last year the ASX All Ordinaries and S&P/ASX 200 posted respectable gains, but will they do so again this year?

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.

The Australian stock market closed up again today with the ASX All Ordinaries Index finishing at 4550.90 points – a rise of 0.82% for the day.  The last couple of months have been generally kind to Australian stocks but we need to keep this recent stock market movement in perspective.

As we enter the last quarter of trading for 2012 we are confronted by a market which appears to be trending upwards since bottoming out in June on one hand, and a gloomy outlook for the global economy on the other. Surprisingly if we have another good few months the ASX All Ordinaries Index could be up near 5000 by the end of the year which just a few months ago, appeared very unlikely.

Now that the Australian stock market has staged a very modest rally over the last few weeks an assortment of finance writers, brokers & market watchers will begin to speculate if this rally is the start of something big.  Indeed if we focus on the short term the market has done fairly well over the last few weeks, however the longer term trend suggests that the Australian stock market is still stuck in a rut.

The last 5 years have taken their toll on many Australian listed companies whose stocks were once considered almost a must for any respectable balanced shares portfolio. But will some of these stocks regain their former glory and move on to set new highs, or are their best days behind them? Today we will look at three shares which are in the category of former stock market high flyers: Billabong International, Macquarie Group & Perpetual Limted.

The Australian stock market has been as exciting to watch over the last month as a Julia Gillard speech.  Over a few days stocks grind out modest gains and then when bad news roll in, the gains are basically given up and the market slides back down again. But if we scratch under the surface and look at some candlestick charts these may help us understand what is driving this type of share market trading.

The last month or so has been quite a ride for Australian stock market investors with the ASX All Ordinaries Index falling from around 4500 points to around 4000 points.  The continuing economic woes in Europe, the economic slowdown in China and the stagnant U.S economy have worked to drag the share market down as have signs that the Australian domestic economy is showing signs of weakness.

For sometime I have been talking about the Australian stock market searching for a bottom of around 4000 for the ASX All Ordinaries & S&P/ASX 200. At of the close of markets yesterday, both indices were around that level, so could this mean the Australian stock market has reached a bottom?

So far this year the Australian stock market had managed to edge slowly upwards and the All Ordinaries Index appears poised to settle above 4400 during the next week or so. Although the risks of a major Eurozone economic implosion appear to be fading, the signs are that the economy in China continues to slow and it appears the U.S. economy is still struggling. The situation in China in particular is likely to have a major impact on where the Australian stock market heads next over the following few months.

It wasn’t that long ago when ex-Treasury Head Ken Henry talked about the Australian economy being in a ‘Golden Age’. I guess when you can retire on a lucrative public service pension and then parachute into a highly paid job as an advisor to the Prime Minister the future does probably seem bright. But now in early 2012 as unemployment appears set to rise and the economy is showing signs of weakness, Ken Henry’s ‘Golden Age’ comment might end up in the same category as Tim Flannery’s ‘Dams will no longer fill’ prediction.

The ASX All Ordinaries Index and S&P/ASX 200 Index finished much lower than I expected in 2011, so this makes me somewhat reluctant to go on record and make an Australian stock market forecast for 2012. However the process of looking at the various economic data and trying to guess where the market will end is a useful one, so foolishly I will outline once again my Australian stock market forecast for the year ahead.

Over the last six months stock markets globally have become more volatile as Europe and the U.S. struggle to revive their economies.  To make things more complicated many advanced economies have racked up so much debt during the ‘good times’ that they now don’t have the capacity to spend their way out of trouble.  There will be no quick fixes and the situation is worrying enough to even rattle the commodities bulls.

As another year starts it’s time for me to make another stock market forecast, one which I will probably regret making in just a few months time. Generally speaking, I expect that 2011 is not going to be particularly kind to the Australian economy and therefore my Australian stock market forecast is not going to make market bulls very happy.