MENU

ASX 6,000 here we come

Despite a lacklustre first day of the new financial year, the S&P/All Ordinaries Index (Index: ^AORD) (ASX: XAO) could be headed to 6,000 by the end of this year.

In early trading the All Ords Index is up 1.1% at 5,425.8, and all it would take is a further 10% gain in the next six months to see the index breach the 6,000 mark.

Ten days like today would do very nicely, thanks very much!

In mid-morning trade, the giant miners, Rio Tinto Limited (ASX: RIO) and BHP Billiton Limited (ASX: BHP) are up 1.6% and 1.9% respectively, while the retailers Woolworths Limited (ASX: WOW) and Wesfarmers Ltd (ASX: WES), which owns Coles, Bunnings, Officeworks, Target, Kmart, service stations and liquor stores are lending their support. Woolies is up 1.7%, while Wesfarmers had gained 1.9%.

Of course the big four banks, Rio, BHP and the retailers would have to do much of the heavy lifting to get us to the 6,000 mark, given their dominance of the index.

The iron ore price expected to rise from its current level of US$92.20 a tonne in the second half of this year, which should add impetus for Rio and BHP to gain. Retailers on the other hand, would like to see rising consumer confidence, which has been hard hit since the Federal Budget, but has gradually been improving.

And the banks would like rising credit growth, stable unemployment and no shocks to the property/housing market, which could see all four hit new highs by the end of this year.

So far we have two out of three of the most important factors heading in the right direction (iron ore and consumer confidence), so it shouldn’t take much to hit 6,000 around Christmas.  Nothing is guaranteed of course, and a ‘black swan’ event could derail the goal at any time.

Concerned about the sell off in bank shares? Don't miss this

The incredible bull market in bank shares could be ending. Find out all the details you need to know in The Motley Fool's newly updated report, "What Every Bank Shareholder MUST Know". Your copy is FREE when you click here now.

Motley Fool writer/analyst Mike King owns shares in Woolworths. You can follow Mike on Twitter @TMFKinga

Two New Stock Picks Every Month!

Not to alarm you, but you’re about to miss a very important event! Chief Investment Advisor Scott Phillips and his team at Motley Fool Share Advisor are about to reveal their latest official stock recommendation. The premium “buy alert” will be unveiled to members and you can be among the first to act on the tip.

Don’t let this opportunity pass you by – this is your chance to get in early!

Simply enter your email now to find out how you can get instant access.

By clicking this button, you agree to our Terms of Service and Privacy Policy. We will use your email address only to keep you informed about updates to our website and about other products and services we think might interest you. You can unsubscribe from Take Stock at anytime. Please refer to our Financial Services Guide (FSG) for more information.