The demand for shares is easy to understand. Dividends across the ASX200 are yielding on average 4.4%, a short term bank deposit is 2.05% whereas the yield on Australian bonds is below 2%.
The Australian share market (ASX) has beaten its record high set before the global financial crisis in 2007.
At 10.35am, the ASX 200 lifted 0.6% to 6,868 points — eclipsing an intraday high of 6,851.5 set on November 1, 2007.
The ASX covers the top 200 companies on the Australian share market and is regarded as the benchmark index.
Australia’s All Ordinaries index reached a record high last week, also recovering to levels not seen since before the global financial crisis smashed stock prices around the world.
One of this year’s best-performing stock markets has just hit a fresh record. Australia’s benchmark index reached its highest level, having added about $240 billion in value this year. https://t.co/yaP1RW6lo9 pic.twitter.com/QjQ1GlWzHY
— Bloomberg Australia (@BloombergAU) July 30, 2019
The demand for shares is easy to understand. Dividends across the ASX200 are yielding on average 4.4%, a short-term bank deposit is 2.05% whereas the yield on Australian bonds is below 2%.
Equity partner at stockbrokers Baillieu, Richard Morrow, told Fairfax investors are reluctantly moving more money from fixed interest investments into blue-chip high yielding stocks.
“People have got no alternative but to look at property and shares. The higher the market goes the higher the risk, but at the end of the day where are you going to get a comparable return?”
He said the S&P/ASX 200’s new high takes it back to where it was 12 years ago.
“It has been a lost decade,” he added.
In the US, Standard and Poor’s stock market index broke its record high on Friday, July 26, 2019.
Britain’s FTSE 100 surged to its highest level in nearly a year on Monday (local time), while exporter stocks benefited from a weaker pound amid heightened ‘no-deal’ Brexit fears, Reuters reported.
The FTSE 100 handily outperformed the broader European market as well as the Wall Street, which were held back by weak earnings.
The expected interest rate cut by the US Federal Reserve later this week has Wall Street traders waiting in anticipation.
Pound sterling sank to a 28-month low as new Prime Minister Boris Johnson said Britain would leave on October 31 without a deal unless the European Union renegotiated.
“An already bad start turned into a full-blown panic attack for sterling. It honestly seems like Boris Johnson’s government is actively chasing a no-deal Brexit,” Spreadex analyst Connor Campbell said.