Friday’s close capped off the best first half’s trading on the ASX for 28 years.
The ASX 200 jumped a massive 17.2% in the six months to last Friday, June 28 to close at 6,618.80.
As solid as that gain was, the ASX 200 remains short of regaining the pre-GFC high in November 2007 above 6,800 points.
For the 2018-19 financial year, the gain was a far more modest 6.85% and 13.1% after dividends.
For June the gain was 3.47%, and for the final quarter of the financial year, the ASX 200 jumped a tasty 7.09%.
That was a solid but not as solid as the 10.1% jump in the three months to March.
The small gain in the overnight futures market on Friday came before the meeting between President Trump and President Xi, the Chinese leader.
That made nice noises and shares here in Asia and then in Europe and the US should make a positive start to 2019-20 later today (unless Trump undoes all that with a tweet when he returns to Washington).
The AMP’s Chief Economist, Dr Shane Oliver wrote on the weekend “news on Saturday that Presidents Trump and Xi have agreed to another trade war truce and a restart to trade negotiations points to a positive start to trade for the Australian share market on Monday.”
The last time a gain of around 17% happened was in 1992 as the economy was starting to emerge from the last recession (That’s the one ‘we had to have’ according to then Treasurer, Paul Keating).
One share to watch today will be Aftertouch pay – the instalment debt group which suffered a near 10% slump in its shares on Friday afternoon after Visa revealed it would be a competitor from January next year.
Aftertouch shares will come under more selling pressure as a result of that announcement and the 200% plus gain in 2019-20 will be hard to repeat in 2019-20.
Afterpay Touch shares were up 233% in 2018-19 but are now heading south after the near 10% slump on Friday after the news that the world’s biggest payment group, Visa, would be entering the instalment payment system from January next year.
That is the bread and butter for Aftertouch and Visa’s move will be global.
It is bad news for the company and those investors (plus the two American groups) who took up the shares in the recent placement and share sale at $23 each. Probably Afterpay’s only chance of surviving is to find a bigger partner – such as Mastercard.
But first, it has to get through the AUSTRAC money-laundering probe. Until that is resolved, no one will want to play with Afterpay.
A year ago the belief was rates would rise and Reserve Bank was tipped to make one, possibly two increases in 2018-19 as inflation edged higher.
Inflation slid from 2.1% in the June 2018 quarter to 1.3% in the three months to last March, wage growth has remained lacklustre, the fall in house prices accelerated and despite this, the irony is that in the early months of this year, the strong belief in the markets and RBA was that rates would rise sometime this year.
That didn’t last past the release of the December national accounts in late March which saw a radical rewriting of economic data – mostly household consumption which took the RBA and other economists by surprise by being significantly weaker than previously estimated.
That, in turn, saw the central bank change rapidly its view to a wait and hold and no movement stance, and then change again to definite easing bias which finally culminated with the June cut of 0.25% in the cash rate (to 1.25%).
The ASX 200 closed the week’s trading just 210 points, or 3.2%, shy of the all-time high of 6,828.70 hit in November 2007.
So another financial year goes past without Australia joining other major markets in regaining pre-GFC levels.
Looking at the financial year, the best performers were: Nearmap – up 238%; Clinuvel Pharma shares ended up 194% over 2018-19, Magellan Financial shares saw a 124% gain, Appen shares jumped 113% and Fortescue Metals shares surged 105%.
