The last trading day of 2007 saw the Australian stock market end with the ASX 200 index up 11.8% to 6339.80 points. That was a lot less than the previous three years (19.0% in 2006, 17.6% in 2005 and 22.8% in 2004) but still above the long-term average. The continued boost from the mining boom was offset in the second half of 2007 by concerns about a US recession being caused by the sub-prime loan problems flowing into a general credit squeeze, and hence leading to lower global growth. As there are question marks over whether the recent growth of the China economy is sustainable without a pause to get inflation under control, the outlook for the Australian stock market in 2008 is uncertain. Then again, with China hosting the 2008 Olympics and the US only a 30% chance of going into recession according to some prognosticators, it isn't certain that 2008 won't end up with a better result than 2007.
The broader All Ordinaries index was up 13.8% to 6421 points during 2007 (compared to 19.9% in 2006, 16.2% in 2005 and 22.6% in 2004), but if one includes dividends the accumulation index was up a very satisfactory 16.1%.
Copyright Enough Wealth 2007