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Euphoric: ASX 200 breaks through 7000 as market leaves behind COVID blues

Business

The ASX 200 broke through the 7000 point barrier and traded today at its highest point since February last year when the pandemic hit.

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The ASX 200 reached 7011 at lunchtime before dropping back below the 7000 barrier in afternoon trade. It’s a 41 per cent improvement on the 4816 it fell to in March 2020.

Since the lockdowns and the Australian economy being pushed into its first recession in 30 years, a lot has happened on Australian and global markets to lift the market out of despair.

In America, the S&P 500 broke through the 4000 point barrier for the first time after the Biden Government pushed through a $US1.2 trillion ($A1.57 trillion) stimulus to which it now wants to add a $US1.9 trillion spend on infrastructure.

The mood in US markets has been tracked by the “Panic-Euphoria” index produced by Citi. It is now well into euphoria.

Likewise in Australia, we have seen recent announcements of the biggest lift in wealth in 11 years, the biggest increase in house prices in 32 years and the ANZ job ads series at its highest point since 2008. International travel has also made a tentative return with open borders between Australia and New Zealand to take effect from April 19.

That was offset yesterday by a dip in consumer confidence brought about the recent Brisbane lockdown and the end of JobKeeper.

ANZ also said today that it expected to see strong spending growth over 2021 and a decrease in the household savings rate while Ray White reported transactions of $8.74 billion in March in Australia and New Zealand. This was a 92 per cent increase year on year and 30 per cent higher than its previous best month in November 2020.

CommSec noted that it was the first time this year that the market was higher for a fifth consecutive trading day. It is now only about 3 per cent from its pre-COVID high.

Proving that timing is everything in share trading, one of the best performed Queensland stocks over the past 12 months was Flight Centre. Its shares are up 78 per cent from the $10.60 they were trading at this time last year. It was in February last year that its shares tanked from $35 to below $9 when international borders were shut.

Corporate Travel shares are up 119 per cent.

Battery materials company Novonix has had a stellar 12 months. Its shares are up 1115 per cent from the 15 cents it was trading at in April last year.

NextDC has also received a push from Goldman Sachs which put a price target of $15 on the data centre owner. Its shares have dropped back recently $11.14 from around $14, but they are still up 32 per cent on this time last year.

Domino’s has more than doubled in a year as it benefited from the lockdowns and Eagers Automotive has jumped 276 per cent as consumers started buying cars again.

Among the major stocks, ANZ is up 85 per cent, BHP 49 per cent, NAB 74 per cent and Rio is up 30 per cent. Afterpay has jumped 500 per cent and Zip 296 per cent.

Bell Direct market analyst Jessica Amir said better than expected economic growth continued to help share market momentum.

She cited the International Monetary Fund outlook, which forecast Australia’s economy to grow 4.5 per cent this year.

Yet investors should trade carefully.

“You can’t just buy any old stock and think it will go up because the market is going up,” Amir said.

“I’m suggesting investors select stocks that are cheaper than they were this time last year but are still seeing significant upside.”

_ Additional reporting AAP

 

 

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