2009 has been a remarkable year for the Australian economy. A year that saw a global financial crisis (GFC), government stimulus packages, emergency interest rate drops and thankfully, record sharemarket rallies.
With 2009 coming to a close, Market Watch examines the key economic indicators, what changed over the year and what could happen in 2010.
Australian sharemarkets
After a terrible start to 2009, the subsequent rally of the Australian sharemarket has lifted investors’ spirits and gone some way to repairing their loss of faith.
Back in January, the mood was extremely different. The Australian sharemarket suffered crippling blows following the lead of the US where the effects of the GFC were in full swing.
On the back of fears the economic downturn had deepened, $40 billion was wiped from the value of the Australian sharemarket in one day and the S&P/ASX 200 plunged 4.27%.
Investors ran for cover with many choosing safe havens like cash and bonds as capital preservation became the main priority.
And while history shows that the sharemarket always bounces back, fear had taken hold. No one knew when we’d hit the bottom or what shape the recovery would take.
Now eight months on now from the March low, the speed and strength of the recovery has surprised even the most bullish investor. The sharemarket rally saw gains each month for seven months in a row, vindicating those who maintained their Australian sharemarket exposures.
Surprisingly, Australian banks were the standout performers for 2009. The Reserve Bank of Australia (RBA) recently reported that the four majors – NAB, ANZ, Westpac and CBA had recorded total headline net profits of around $8.6 billion in the latest half year with the annualised net profit on equity at around 13.5%.
It was only at the end of October that the sharemarket fell for the first time in eight months. For the September quarter alone Australian shares returned 22% – the strongest quarterly result since 1987. (more…)
With a few small hiccups along the way, the Australian and global economies have continued their recovery. In this update, MLC’s Investment Strategist Brian Parker looks at:
December Economic and Market Update video here.
Download Brian Parker video script