Australia's stockmarket falls more than 5 per cent in 2022
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Australia's stock market made small gains in its final day of trading for 2022, but it lost more than 5 per cent over the year.
There'll be no trading on Monday next week, due to the New Year's Day public holiday. Trading will pick up again on Tuesday 3 January.
Disclaimer: this blog is not intended as investment advice.
By Gareth Hutchens
That's it.
Trading is done for the year. The ASX200 index has ended 2022 on 7,038.7 points, down more than 5 per cent.
The Australian dollar is currently buying 67.76 US cents. It's down 6.7 per cent since this time last year, when it was buying 72.65 US cents.
The Australian Stock Exchange will open again on Tuesday 3, 2023.
Thanks for having me today.
By Gareth Hutchens
Despite making gains in the last trading day of the year, the ASX200 lost more than 5 per cent this year.
There are different ways of measuring it.
If you take what happened from the first trading day of this year (January 4, 2022) to the last (30 December, 2022), the index fell from 7,589.8 points to 7,038.7 points: – 7.26 per cent.
If you take what happened from the last trading day of last year (31 December, 2021) to the last trading day of this year (30 December, 2022), the index fell from 7,444.6 points to 7,038.7 points: -5.45 per cent.
And according to the ASX website, the index has shed 6.32 per cent over the last 52 weeks.
But anyway you cut it, it hasn't been a good year.
By Gareth Hutchens
The ASX200 has closed for the day, up 0.26 per cent.
Here's how other markets in the region are tracking, as of 4.35pm AEDT:
By Gareth Hutchens
Australia's sharemarket has limped home, ending just 18.6 points higher than yesterday.
Yesterday closed on 7,020.1 points, and the index looks like it's settled on 7,038.7 points today, up 0.26 per cent.
The gains were led by industrials, energy and healthcare stocks, while real estate and basic metals weighed on the index.
By Gareth Hutchens
We've entered the final 10 minutes of trading for the ASX200 today
By Gareth Hutchens
Thousands of ING Bank customers should now have received their missing wage payments from employers after a glitch with the bank's payment chain.
ING Australia has apologised for the inconvenience to customers who did not receive their regular salaries over the Christmas period.
It blamed a "glitch in the payment chain" preventing some payments being sent from other institutions.
By Gareth Hutchens
Back to that book about Keynes' approach to investing.
He became so confident in his ability to make profitable trades that he was almost forced to take physical delivery of an enormous amount of wheat from South America.
But he had nowhere to store the wheat, so he hatched a preposterous plan to store it in a medieval chapel in King's College before coming up with a better work-around.
As the book tells:
"Owing to one of his more flamboyant commodity trades, Keynes was about to be encumbered with the equivalent of a month's supply of wheat for the whole of the United Kingdom. Rather than pay the difference between the spot price of wheat and the contract price – the conventional method for settling a futures contract – Keynes elected to back his judgement and take physical delivery of the grain, confident that the market would eventually rise beyond his contracted price.
"In a rare victory for aesthetics over commerce, Keynes' impertinent scheme to convert King's College chapel into a granary was averted – apparently the building was simply not big enough to store the consignment. Instead, Keynes stalled by objecting to the quality of the cargo, complaining that the wheat contained more than the permitted number of weevils per cubic foot. By the time to grain was cleaned, the market price had risen such that the wily economist eventually made money on the contract."
By Gareth Hutchens
At this time of year it's easy to get reflective.
And a year ago (16 December 2021), Reserve Bank governor Philip Lowe gave a speech in Wagga Wagga in which he talked about the year ahead.
He noted that inflation had picked up in the US recently (in 2021), where it was running at 6.8 per cent, with underlying inflation above 4 per cent.
He said inflation in Australia was only around 3 per cent at that stage, and in underlying terms it had only just crossed above 2 per cent for the first time in six years.
He produced the graph below.
But fast forward to today and where do things stand?
Australia's headline inflation is now running at 7.3 per cent, with underlying inflation at 6.1 per cent.
By Gareth Hutchens
Reuters has put together an important little graph just now.
It shows how Australian energy stocks are on track to end 2022 nearly 40 per cent higher.
Compare that to the broader ASX200 index which looks like it could be down by around 5.2 per cent for the year.
The graphic below shows the gains of all three. Woodside is the red line, Origin is the green line, and Santos is the blue line.
The purple line is the ASX200 energy sector.
The yellow columns show oil prices peaking in June and then declining steadily until year-end.
By Gareth Hutchens
Here's how things stand at 1.45pm AEDT
By Gareth Hutchens
My colleague Sue Lannin spoke to Kirby Rappell from SuperRatings about the hit to super balances this year.
He says it was a year of two halves for Australia's sharemarket in 2022, and we may have to get used to more volatility next year.
By Gareth Hutchens
With a few hours left in trading for the year, the ASX200 index will be finishing with significant losses.
And it's not the only market.
US stock exchanges have been decimated this year, suffering their worst year since the global financial crisis.
You can see it in our superannuation balances.
The superannuation research house SuperRatings says the median return for super accounts that choose to invest with "balanced" options (with 60-76% growth assets) is estimated to be -4.4 per cent for calendar year 2022.
It says super balances actually saw a median positive overall return for the second half of the calendar year of 3.2 per cent (July to December), but it wasn't enough to offset the median -7.4 per cent fall for the first half of the calendar year (January to June).
You can see what they're talking about in this graph.
The ASX200 index fell heavily in the first six months of this year, and then it spent the next six months trying to recover.
Overall, with Australia's sharemarket ending lower for 2022, and with overseas stock exchange faring even worse, it's done a lot of damage to our superannuation savings.
The last negative median calendar year return for a balanced option super fund was recorded in 2011.
By Gareth Hutchens
This story is interesting.
Reuters reported overnight that Japanese insurers are expected to continue providing marine war insurance which covers the sinking and requisition of ships due to war in Russian waters after Jan. 1.
"Japan's Tokio Marine & Nichido Fire Insurance, Sompo Japan Insurance and Mitsui Sumitomo Insurance told shipowners last Friday that from Jan. 1 they would stop offering insurance coverage for ship damage caused by war in Russian waters, because reinsurers were withdrawing coverage.
"But on Tuesday, a senior official at the industry ministry said the Japanese government had asked insurers to take on additional risks to continue providing war insurance for liquefied natural gas (LNG) shippers in Russian waters. This was to ensure Japan will continue to import the vital fuel from the Sakhalin-2 gas and oil project in Russia's Far East.
"The insurance companies negotiated with reinsurers to replace part of the coverage and they are now expected to be able to continue offering war insurance for LNG carriers, the Nikkei said.
"After renegotiating with U.K. reinsurers, a total of 30 billion yen ($224 million) are expected to be secured, with domestic insurers covering about 8 billion yen and overseas reinsurers taking on about 22 billion yen.
"But the underwriting capacity will be less than half of the previous 67 billion yen, according to the Nikkei.
"Therefore, the number of ships that can be compensated at one time is likely to be about half of what it used to be, which means shipping companies may need to review their operations, the Nikkei said."
By Gareth Hutchens
How will share markets deal with recessions in major economies next year?
This piece illustrates what's already happening on the ground in some parts of the UK.
"Why is Britain set to be the first country into recession and the last country out?" Labour leader Keir Starmer asked in parliament last month.
By Gareth Hutchens
Japan's Nikkei225 index has picked up the positive momentum from Wall Street overnight and Australia's stock market today.
It's currently trading 0.32 per cent higher than yesterday's close.
It closed yesterday on 26,093.67 points, and it's currently sitting at 26,176 points.
By Gareth Hutchens
I stumbled across a book recently.
It's about the famous British economist John Maynard Keynes, and the trading strategies he devised through trial and error.
When he first started buying shares he figured he'd be able to beat the market. But he got badly burnt.
So he re-thought his strategy and ended up devising a set of principles that set him on the path to becoming a "value investor" – he started trying to pick stocks that appeared really undervalued, with great earnings potential.
Warren Buffett has spoken quite a lot about Keynes' approach.
Anyway, how's this excerpt from the book:
"Keynes' switch from speculator to value investor delivered a radical change in his fortunes. In contrast to the grim days of the early 1930s – where, "although not quite destitute," he had been obliged to put two of his best-loved paintings, a Matisse and a Seurat, up for sale – Keynes had again become "horribly prosperous" by the time The General Theory was published. In the years between the Wall Street Crash and the end of 1936, Keynes multiplied his wealth more than sixtyfold, parlaying net assets of just under £8,000 at the end of 1929 to more than £500,000 only six years later."
Not bad at all.
It's a great little read.
By Gareth Hutchens
As of 11.10am AEDT, all sectors have gained a little bit of value today.
Industrials, energy, and technology stocks have led the way.
By Gareth Hutchens
After an hour of trading, the ASX200 is up 0.55 per cent on yesterday's close.
The index has gained 38.2 points, to be sitting at 7,058.3 points.
By Gareth Hutchens
This graph is great.
I've taken it from a Reuters analysis of the share price of the major banks this year.
It shows their performance relative to the ASX200 index itself (the yellow line).
Westpac is performed best, followed by NAB and the Commonwealth Bank.
ANZ is the only bank to underperform the index. It's lost around 13 per cent year-to-date. It has more exposure to New Zealand than the other banks, and New Zealand is expected to be hit by recession early next year.
By Gareth Hutchens
As expected, the ASX200 jumped higher as soon as trading began this morning.
You can see that on the right-hand side of the graph.
The index closed yesterday on 7,020 points, and it's already around 0.5 per cent higher.
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