Market outlook for 2024-25

Company News

by Glenn Dyer

A significant 35-point drop is anticipated on the first day of ASX trading in the 2024-25 financial year, likely to become a frequent occurrence in the months ahead amidst mounting uncertainties surrounding inflation, the global economy, and politics.

The ASX 200 closed at 7767.5 on Friday, up from 7203.3 in 2022-23, marking a modest annual gain of 560 points driven primarily by the performance of the four major banks, as noted last week.

The ASX 200 ended June down 0.4% for the week, up 0.85% for the month, down 1.6% for the quarter, 2.33% higher year-to-date in 2024, and approximately 7.8% for the full 2023-24 year.

This performance was less than convincing, and similar trends are expected throughout the current financial year, at least until December.

"More constrained and volatile returns are likely over the 2024-25 financial year, reflecting poor valuations evidenced in the narrow earnings yield versus bond yield gap," wrote AMP chief economist Shane Oliver over the weekend.

Oliver pointed out elevated levels of investor sentiment in certain markets and sectors, along with technically overbought conditions and narrowing breadth in the crucial US market, coinciding with uncertainties surrounding Nvidia and the technology sector.

"There are also significant geopolitical risks involving France and the US, highlighted by renewed concerns over the potential for a trade war if Trump is re-elected," Oliver added, noting Biden's shaky performance in recent polls. PredictIt now gives Trump a 57% chance of winning, compared to Biden's 35%.

By Friday, NAB had surged 38% for the financial year, Commonwealth Bank rose 28%, Westpac gained 27%, and ANZ lagged with a 20.5% increase.

BHP saw a 6% decline, while Rio Tinto shares rose 2.7%. Whitehaven Coal climbed nearly 14%, Woolworths dropped 15%, and Wesfarmers gained 32%. Shares of global logistics group WTC jumped 29%, and Xero shares increased by 19%, reflecting a milder trend compared to the surge seen in Wall Street's tech giants.

Seven West Media shares fell over 52%, while Nine Entertainment shares lost 27%. Fortescue shares fell just over 3%, and Coles shares were down 7%.

CSL shares saw a modest 6% increase, whereas Macquarie Group added 17%, despite weak results as of March 31, with concerns of continued challenges despite a commodity price boost in May.

Glenn Dyer

Glenn Dyer has been a finance journalist and TV producer for more than 40 years. He has worked at Maxwell Newton Publications, Queensland Newspapers, AAP, The Australian Financial Review, The Nine Network and Crikey.

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