After a period of more than 11 years, the ASX200 index benchmark has returned to higher levels that were set before the global financial crisis that knocked down the global economy. The ASX200 rose by 0.65 per cent or 44.3 points to reach a value of 6,870.1 points, a raise of 20 more than the previous record of 6,852, which had been achieved in November 2007.
The wider, All Ordinaries index broke through to its pre-global financial crisis peak earlier, the level of the ASX200, which primarily tracks the share values of the top 200 companies in the stock exchange of Australia has floated bellow the new high benchmark in the recent past.
However, as the market has finally recovered from the impact of the 2008 financial crisis, with an imminent threat of collapsing businesses, new concerns have now emerged about whether Australia will be able to maintain its positive trend, which has been unbroken for 28 years, without going into a recession.
Bank Guarantees and Government Stimulus Steadies Market
The Reserve Bank of Australia cut interest rates to a record low of 1 per cent in July 2019, in an effort to stimulate the country’s economy, which has displayed sluggish activity despite the high prices of commodities across the country. In addition, the bank has also displayed concerns about lowered levels of spending by the average Australian household, which has resulted in a slump for the country’s retail sector, which has further led to low growth in wages.
So far, Australia’s economy has been kept away from a recession by targeted government stimulus, the higher prices of the country’s coal and iron resources, and a bank guarantee. However, the Australian economy has been slow to recover in comparison to that of the US and countries in Asia.
According to information by the S&P Dow Jones agency, which maintains the index of the ASX200, the index hit its lowest point in March of 2009, indicating a period of more than 10 years to overcome the losses that were made then.