Aussie market riding a boom

Published in Daily Telegraph, June 2007 by Rhys Haynes

The Australian sharemarket has jumped more than 11 per cent this calendar year, ranking it 33rd strongest among global markets.

A world-wide economic boom has pushed all but eight of the 72 surveyed markets north, with Australia enjoying a rise of 11.4 per cent.

Ukraine so far has the best performing sharemarket, backed by a mining boom that has pushed it up a staggering 97.4 per cent since January 1, according to the data compiled by Commsec data.

Next strongest so far in 2007 is Peru, up 66.8 per cent and China is third, having jumped 56 per cent.

Of the major global sharemarkets, the US Dow Jones has lifted 8.8 per cent, with the UK FTSE up 6.9 per cent and Japanese Mikkei 3.5 per cent stronger.

Wealth Within Analyst Dale Gillham said the Australian sharemarket had been volatile since reaching an all-time high of 6435.05 on June 4.

“With the current indecision in the market anything is possible and the All Ordinaries could rise up to trade above its recent highs” he said.

“The important thing is how the market unfolds over the next few days as this will confirm whether the pull-back is occurring or whether the bull market is still in place.”

The data also showed Australia’s interest rates remained among the highest of major economies and second highest in the industrialised world behind New Zealand at 8.34 per cent,” Commsec chief equities economist Craig James said.

“Australian interest rates are about three quarters of a per cent above average global rates.

“As the RBA Governor acknowledged (on Thursday), Australian rates are currently higher than normal. Including high interest rate economies, average three-month interest rates across the world stand at 5.75 per cent.”

In other economies, three-month interest rates are about 5.8 per cent in the UK, 5.25 per cent in the US and 0.6 per cent in Japan. Turkey was the highest in 2007 at 19.08 per cent followed by Iceland at 13.76 per cent.

In other data, the Australian dollar has lifted almost 6 per cent against the US dollar, making it the 13th strongest of 120 currencies, Commsec said.

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