ASX continues to soar above 10-year high

ASX 10 year high Australia stock market 2018

Australian indices have hit fresh decade highs this week with the ASX 200 reaching 6249.3 points today – earlier this week hitting the highest it has been since January 2008.

The benchmark ASX 200 index closed the day at 6232.1 points and now stands around 600 points away from its all-time peak of 6828.7 reached in November 2007. (note that the intraday high that day was 6851 points)

ASX 200 chart 10 year high XJO
ASX 200 chart highlighting recent gains in the market.

Meanwhile, the small ordinaries index reached a seven-year high of 2923 points earlier today – last seen in January 2011. The broader All Ordinaries index has also hit a 10-year high and closed up 0.93% at 6332 points.

The bullish sentiment was underpinned by strength from the banking sector as several major banks achieved their own recent highs.

Westpac closed up 0.96%, ANZ 0.47% higher, Commonwealth Bank gained 1.38% and National Australia Bank rose 1.04%. Australia’s largest investment bank Macquarie Group extended its bullish run and was up 0.83% to set a new record high of A$122.73 per share.

At the top

According to market analysts, the strong banking performance could be down to the fact that “peak fear” regarding the fallout from Australia’s royal banking commission is now in the final stages, with the perception that more bad news that could rattle balance sheets or future earnings estimates, won’t be forthcoming.

Even concerns emanating from China couldn’t dampen the good mood for stock bulls today.

China’s central government has sought to calm the country’s hundreds of millions of retail investors telling them not to be concerned about economic stability, brought on by renewed fears of “deleveraging” within the country’s highly inflated capital markets.

China is also reportedly in the crosshairs of US President Donald Trump who has again threatened to impose tariffs on another US$200 billion (A$271 billion) of Chinese goods, which prompted a warning of retaliation from Beijing this week.

UBS equity strategists have predicted that China may fine-tune its economic policy and boost infrastructure investment to alleviate concerns about deleveraging.

At the bottom

At the other end of the spectrum, one of the worst performers (and the most traded stocks in recent days) on the ASX today was Telstra, closing 1.81% in the red.

Yesterday, Australia’s largest telco said it plans to split its mobile and infrastructure operations into separate businesses while cutting 8,000 jobs as part of efforts to strip out an additional A$1 billion of costs by 2022.

The changes are part of a strategy to simplify the business in the face of increasing competition and the development of Australia’s national broadband network.

The news led to Telstra shares dropping over 6% already this week.

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