Here's what shaped the S&P/ASX 200 in 2014

Falling commodities, Medibank Private Ltd (ASX:MPL) and new records for Commonwealth Bank of Australia (ASX:CBA) and Telstra Corporation Ltd (ASX:TLS) were just some of this year's highlights

You’re reading a free article with opinions that may differ from The Motley Fool’s Premium Investing Services. Become a Motley Fool member today to get instant access to our top analyst recommendations, in-depth research, investing resources, and more. Learn More

It's been a bumpy ride for Australian investors in 2014. While equity markets around the globe have soared to never-before-seen heights, the S&P/ASX 200 (Index: ^AXJO) (ASX: XJO) has moved sideways in a rather rollercoaster-like fashion. However, a late Santa rally has provided a much needed spark with the index now looking set to finish the year 1.3% higher at around 5420 points.

XJO

Source: Google Finance

Here are five of the biggest events that shaped the Australian share market in 2014:

Commodities

Indeed, the plummeting iron ore and oil prices were one of the biggest factors impacting the economy and sharemarket over the last 12 months. Increasing supply from miners such as BHP Billiton Limited (ASX: BHP) and Rio Tinto Limited (ASX: RIO), combined with weakening demand from China, saw the iron ore price plunge more than 47% since the beginning of the year.

The oil price faced a similar issue with global supply far outpacing demand. Brent oil, the global benchmark, has nearly halved in value since June which has reaped havoc on the energy sector. Qantas Airways Limited (ASX: QAN) has certainly benefited however thanks to lower petrol prices with the stock up more than 90% over the last six months.

IPOs

Plenty of corporations took advantage of the market's sentiment by listing on the ASX over the last year. While companies like Healthscope Ltd (ASX: HSO) and iSentia Group Ltd (ASX: ISD) have enjoyed strong debuts, no float received as much hype as health insurer Medibank Private Ltd (ASX: MPL). In what was a heavily oversubscribed float, the sale of Medibank raised the government roughly $5.7 billion. While mum and dad investors were sold the stock for $2.00, it has since risen to $2.43 – a 21.5% paper profit.

Free Trade Agreement

The Australian government reached a historic Free Trade Agreement with China earlier in the year, as well as agreements with Korea and Japan. The Chinese deal will see a huge reduction in the tariffs currently applied to various Australian exports with some of the biggest beneficiaries to be in the agriculture and dairy industries. With China's population tipped to continue skyrocketing, this could be huge for companies like Bega Cheese Ltd (ASX: BGA) and Select Harvests Limited (ASX: SHV).

The Financial System Inquiry

The results of the Financial System Inquiry were released earlier this month, unveiling 44 recommendations. Among them were the proposal for Australia's big four banks to hold more capital in reserve as a safeguard against another economic downturn, while SMSFs may also be banned from borrowing to invest in property.

Interest Rates

The Reserve Bank held interest rates at just 2.5% over the course of the year which saw investors flock towards some of Australia's best dividend stocks. Commonwealth Bank of Australia (ASX: CBA), which is Australia's largest bank, recently recorded a fresh all-time high price while Telstra Corporation Ltd (ASX: TLS) managed to hit a new 13-year high at $6.03.

With unemployment levels rising however, analysts are now expecting the RBA to cut rates at least once in 2015, while some say they could drop to just 2%. If that scenario were to play out, you can expect plenty more action on the dividend front in the New Year.

Motley Fool contributor Ryan Newman does not own shares in any of the companies mentioned. You can follow Ryan on Twitter @ASXvalueinvest.

More on ⏸️ Investing

Close up of baby looking puzzled
Retail Shares

What has happened to the Baby Bunting (ASX:BBN) share price this year?

It's been a volatile year so far for the Aussie nursery retailer. We take a closer look

Read more »

woman holds sign saying 'we need change' at climate change protest
ETFs

3 ASX ETFs that invest in companies fighting climate change

If you want to shift some of your investments into more ethical companies, exchange-traded funds can offer a good option

Read more »

a jewellery store attendant stands at a cabinet displaying opulent necklaces and earrings featuring diamonds and precious stones.
⏸️ Investing

The Michael Hill (ASX: MHJ) share price poised for growth

Investors will be keeping an eye on the Michael Hill International Limited (ASX: MHJ) share price today. The keen interest…

Read more »

ASX shares buy unstoppable asx share price represented by man in superman cape pointing skyward
⏸️ Investing

The Atomos (ASX:AMS) share price is up 15% in a week

The Atomos (ASX: AMS) share price has surged 15% this week. Let's look at what's ahead as the company build…

Read more »

Two people in suits arm wrestle on a black and white chess board.
Retail Shares

How does the Temple & Webster (ASX:TPW) share price stack up against Nick Scali (ASX:NCK)?

How does the Temple & Webster (ASX: TPW) share price stack up against rival furniture retailer Nick Scali Limited (ASX:…

Read more »

A medical researcher works on a bichip, indicating share price movement in ASX tech companies
Healthcare Shares

The Aroa (ASX:ARX) share price has surged 60% since its IPO

The Aroa (ASX:ARX) share price has surged 60% since the Polynovo (ASX: PNV) competitor listed on the ASX in July.…

Read more »

asx investor daydreaming about US shares
⏸️ How to Invest

How to buy US shares from Australia right now

If you have been wondering how to buy US shares from Australia to gain exposure from the highly topical market,…

Read more »

⏸️ Investing

Why Fox (NASDAQ:FOX) might hurt News Corp (ASX:NWS) shareholders

News Corporation (ASX: NWS) might be facing some existential threats from its American cousins over the riots on 6 January

Read more »