Invest
ASX smashes through 7,000 point barrier
The Australian sharemarket has set a new all-time high, with the S&P/ASX 200 index breaking through the 7,000 point barrier for the first time in history.
ASX smashes through 7,000 point barrier
The Australian sharemarket has set a new all-time high, with the S&P/ASX 200 index breaking through the 7,000 point barrier for the first time in history.
The S&P/ASX 200 ended Thursday’s trading period 47 points higher, growing by 0.7 per cent before closing at 7041.8.
Anthony Doyle, cross-asset specialist at Fidelity International, believes that while there isn’t much difference between the ASX 200 at 6,995 and 7,005, crossing the 7,000 point barrier could trigger emotional investors.
“Behavioural economists will tell you that big, round numbers (like 7,000) can have a large influence on investor emotion and behaviour,” Mr Doyle said.
“I have seen academic research which shows that market-wide attention-grabbing events can lead investors to sell equities as they perceive that the level of the equity market is high.”
“And at an individual portfolio level, it can result in investors selling high-performing equities, while holding on to underperforming companies as they hope to recoup some losses.”
“As a result, we often see a few lacklustre trading sessions in the days following attention-grabbing events,” Mr Doyle said.
Deakin University associate professor of finance Victor Fang reiterated Mr Doyle’s thoughts, noting investors shouldn’t panic.
“Hang in there and resist panic selling based on short-term fear and overreaction to global events,” the professor said.
“The Australian sharemarket has started the year strongly and is up around 5 per cent in January, despite a backdrop of domestic risk and international tension,” he said.
Does the new record matter?
Mr Doyle said breaking the record both matters in the very short term and has no impact in the long term.
“While conditions remain constructive for the Australian equity market, it’s certainly not without risk,” Mr Doyle noted.
However, the investor believes the rise of populism can be a threat to global growth as nations look inward instead of outward.
“Populist policies like protectionism (trade wars), anti-immigration and government intervention are all anti-growth in nature and are likely to continue to put downward pressure on the already sluggish 1 to 2 percent economic growth range in most developed economies,” Mr Doyle said.
Despite global concerns, domestically, Mr Doyle is bullish on Australian assets.
“We are still positive on the Australian equity market this year. We’re in the unusual position of having tailwinds from both monetary and fiscal policy.”
“Having pretty much used up all monetary policy ammunition, governments are now being asked to step up with fiscal policy to help economies break free of this very low-growth world.”
“This will likely come via significant infrastructure development, which should be good news as low interest rates combined with fiscal stimulus is normally a positive environment for equity returns,” the fund manager concluded.
About the author
About the author
Stock market
The pros and cons of DIY investing
“Social trading” is being flagged as a very real issue now affecting the Australian stock market – especially as low-cost stock trade platforms gain popularity. ...Read more
Stock market
Where to find dividends in a low-rate environment
Australian investors who are income-focused are still able to find strong dividend-paying stocks, but the market is changing, an expert has said. ...Read more
Stock market
Did investors overreact to the COVID-19 pandemic?
The economic downturn has not hit many sectors of the economy as hard as first predicted, with the reporting season revealing that many sectors will recover quickly, an investment fund has revealed. ...Read more
Stock market
Market volatility not a worry for Millennial investors
In spite of COVID-19-related volatility, Australian investors aged between 24 and 39 remain bullish about the current sharemarket. ...Read more
Stock market
Why investors will miss their mark for the next 5 years
Australian investors are urged to rethink their investment targets, with the COVID-19 recovery likely to have an impact on returns, new research has found. ...Read more
Stock market
Standing strong in a crisis, ethical investments are here to stay
Ethical investments are more than just a short-term fad, an investment manager has advised. ...Read more
Stock market
Sovereign wealth fund goes negative for the first time since the GFC
The Future Fund has posted a rare negative return for 2020 and warned that a “challenging and volatile” economic climate could hurt previously strong gains moving forward. ...Read more
Stock market
Don’t worry about dividends: Stocks still going strong
Dividends are still up for grabs for active investors willing to wade through the major headlines and an abundance of market negativity, an investment expert has flagged. ...Read more
Stock market
The pros and cons of DIY investing
“Social trading” is being flagged as a very real issue now affecting the Australian stock market – especially as low-cost stock trade platforms gain popularity. ...Read more
Stock market
Where to find dividends in a low-rate environment
Australian investors who are income-focused are still able to find strong dividend-paying stocks, but the market is changing, an expert has said. ...Read more
Stock market
Did investors overreact to the COVID-19 pandemic?
The economic downturn has not hit many sectors of the economy as hard as first predicted, with the reporting season revealing that many sectors will recover quickly, an investment fund has revealed. ...Read more
Stock market
Market volatility not a worry for Millennial investors
In spite of COVID-19-related volatility, Australian investors aged between 24 and 39 remain bullish about the current sharemarket. ...Read more
Stock market
Why investors will miss their mark for the next 5 years
Australian investors are urged to rethink their investment targets, with the COVID-19 recovery likely to have an impact on returns, new research has found. ...Read more
Stock market
Standing strong in a crisis, ethical investments are here to stay
Ethical investments are more than just a short-term fad, an investment manager has advised. ...Read more
Stock market
Sovereign wealth fund goes negative for the first time since the GFC
The Future Fund has posted a rare negative return for 2020 and warned that a “challenging and volatile” economic climate could hurt previously strong gains moving forward. ...Read more
Stock market
Don’t worry about dividends: Stocks still going strong
Dividends are still up for grabs for active investors willing to wade through the major headlines and an abundance of market negativity, an investment expert has flagged. ...Read more
More articles
Website Notifications
Get notifications in real-time for staying up to date with content that matters to you.
