Australian Stock Market Rise- Consumer Sentiment Paving The Way

By Dale Gillham

This week you may have read how consumer sentiment in Australia has dropped back to levels not seen since the 1990’s. Like me, you may remember many things about that period, but consumer sentiment is unlikely to be one of them. As an investor, you simply want to know whether this data is likely to have a significant impact on your investments. So, what does this information mean for the Australian stock market?

Despite Sentiment Australian Stock Market Climbs to New Highs…

To put this into perspective, let’s go back in time to the early 90’s, when you may recall how Australia was slowly recovering from the 87’ crash and there was a lot of change happening in our economy, both good and bad. You may remember the Pyramid Building Society collapse that saw many people lose their life savings. The 90’s also saw the biggest sell off of Australian government owned assets, including the partial sale of Telstra which was listed on our market in the late 90’s. We also felt the impact of the Asia crisis in the late 90’s and yet, despite all of the ups and downs during that decade, the Australian stock market continued to rise to new all-time highs, growing by around 90 per cent.

History Points to Likely Future Direction of Australian Stock Market

History shows that beyond any major financial correction the Australian stock market will eventually trade to new all-time highs in three to nine years, and currently our market is still trading below the 2007 high, which means further upside lies ahead for the Australian stock market. At times, negative sentiment can simply lead to softer share prices, which we are likely to see occur in 2015, however, remember that this will pave the way for another long term rise.

So What Do We Expect in the Australian Stock Market?

Last week saw a wild swing in the value of the All Ordinaries Index as it initially began climbing above the prior week’s high before swinging back down below the prior week’s low. It is also worth noting that the close on Friday finished low on the weekly range at 5598.9 points. Given that the market had in August gained around 4.6 per cent in just nine days it is logical to now see the Australian stock market moving back temporarily before volatility settles.

Whilst there is a mix of both good and bad political and economic news having an impact on market mood, one positive that stands out from a global economic perspective is the most recent company data out of the US, which shows how the majority of companies either met expectations or surprised on the upside. With the US in an improved earnings phase this year other markets will continue to follow.

all ordinaries index australian stock market image 12-09-14

To your profitable trading,

Dale Gillham Chief Analyst Wealth Within

Dale Gillham, ‘one of the country’s most respected analysts’ (Wealth Creator Magazine, Nov/Dec 2004), sought after key note speaker and author of the best selling book ‘How to Beat the Managed Funds by 20%’. Dale has assisted thousands of traders and investors to learn to trade shares and become confident and profitable in their direct share investments. Tired of an industry saturated by quick fix gimmicks and expensive short-courses, Dale co-founded Wealth Within to provide ‘ real education and ongoing personalised support’, as well as independent investment advice to traders and investors who have become disillusioned by the market for one reason or another. As testament to this, Wealth Within launched Australia’s first and only nationally accredited Diploma of Share Trading and Investment.