For the month of January, the US market, as measured by the S&P 500 index, advanced by 5%, to its highest monthly close since October 2007. In the past year, the S&P500 has risen by 13.1%. The US market is now up by 121.4% from its early-March 2009 trough. Over the past 50 years, when the January result has been positive, the year has turned out to be positive 83% of the time. The ASX 200 index rose by 4.9% in the month, to its highest monthly close since August 2008.
If one were looking for a reason for this continued strong performance, one could perhaps say that “nothing bad happened”. In the US, the earnings season began and so far it has been positive. As a general rule, more companies report earnings above expectations than below, in part because they “manage” expectations beforehand. This year, this “upside surprise” phenomenon has been more pronounced than usual.
Chris Caton
Chief Economist
Indices:
The Australian All Ordinaries Index has moved up increasing +38 points (or +0.7%) since closing last Friday to 02:10 pm today.
The rest of the world as measured by the MSCI index decreased -6 points (or -0.6%) in A$ from closing last Friday to end of trade Thursday.
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