The Australian Securities Exchange (ASX) experienced its worst fall at open since the beginning of the coronavirus pandemic in early 2020, dropping by five per cent.
InvestSMART’s Evan Lucas says despite reaching record highs, whether the ASX 200 will get to 8,000 points by Christmas as some have predicted remains “the big unknown”.
“It certainly will happen one day in the future, whether it’s the end of this year though is probably the big unknown,” he said.
“Why I point that out is that year to date we’re actually up about 11.5 per cent. For the ASX to get to 8,000 points that’s another 10 per cent from where we currently are.
“Sometimes we also forget when we talk about the index, it’s the collection of all of the companies listed in the ASX 200 or on the All Ords across the country as one group.
“And the bigger they are obviously the larger percentage they make of that index. So, the example there straight away is CBA. “CBA makes up 8 to 9 per cent of the ASX 200. For it to do the lifting required to get the ASX that 10 per cent it needs it needs to probably grow by about 15 per cent in six months.
“Although
InvestSMART’s Evan Lucas says something amazing must happen for the ASX to reach 8,000 points by Christmas.
Some economists have predicted the market could reach those highs by the year’s end.
“If you look at the ASX there’s about 13, possibly 15 stocks drive the overall index,” Mr Lucas told Sky News.
“Realistically you could probably boil down to the big 15 that are the big drivers – the big four banks, Rio, BHP, CSL, Telstra, Woolies – they need to move.
“They’re the ones that have to get there.”
Business confidence is skyrocketing in the wake of the pandemic despite the negative impact of snap lockdowns, according to InvestSMART’s Evan Lucas.
“Business is at a level of confidence we haven’t seen before,” he told Sky News.
“They have never had better abilities to borrow, their credit cycle is very, very good at the moment and their expectations of growth are very much at a record all-time high.
“Business confidence is at record all time high according to a survey from NAB so the expectation is that their future expenditure and therefor their future spending should match that.”