Bumper year for ASX 200 ends with slight slump on final trading day
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The news: The Australian sharemarket finished slightly weaker on Friday, but higher for the year to round out a 2023 defined by high interest rates, sluggish global demand and big bets on AI and tech stocks. The benchmark ASX 200 was down 0.31% for the day to 7,590.80, around 7.9% higher than 2022's close. The broader All Ordinaries posted an annual gain of 8.3%.
The numbers: Australian IT stocks performed better than any other sector in 2023, gaining 32.4% for the year. Consumer discretionary stocks also performed well, gaining 19% as household spending showed more resilience than expected against a backdrop of high-interest rates and inflation. Miners also performed well thanks strengthening commodity prices, materials stocks up 11% for the year. Real estate stocks were also up 10.7% for the year.
Oil prices are on track to end the year about 10% lower, the first annual drop in two years. Supply cuts, high inflation and cost pressures tempered demand while geopolitical tensions in the Middle East sent oil prices fluctuating in 2023.
The Australian dollar made modest gains on Friday to trade at 68.4 US cents, up almost 9% from the year-lows of under 63 US cents in October. There has been broad weakness in the greenback since late November as bets on US rate cuts for next year tempted investors away from the safe haven currency.
The context: There is only one Wall St trading session left in 2023 and Chicago Purchasing Managers' Index (PMI) data is due shortly before 2am AEDT.
December's global equities rally indicate mid-2024 US interest rate cuts are all but priced in, but some investors are asking if the Magnificent Seven tech stocks (Apple, Microsoft, Alphabet, Amazon, Nvidia, Meta and Tesla) can hold their market-leading momentum after a bumper 2023. The Seven are expected to post a 39.5% aggregate earnings increase for the year, against a 2.6% drop for the rest of the S&P 500, according to LSEG data.
