The ASX 200 just set a new all-time high. Could we hit 8,000 points this year?

It might be worth looking at how the ASX 200 Index climbed its way to an all-time high over the past year.

An excited man stretches his arms out above his head as he reaches a mountain peak.

Image source: Getty Images

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

sdf

The S&P/ASX 200 Index (ASX: XJO) set a new record-high closing price this afternoon. A strong showing from oil producers, miners, and property groups has propelled the index into unexplored heights.

At such a milestone, it's worth looking at the path taken. How have we arrived at this destination despite the headwinds? Most importantly, where might we be going next?

Banks and miners tow the ASX line

This time a year ago, we had overcome the first wave of coronavirus cases. The ASX 200 was also amidst a recovery – having bounced from 4,816 points to 5,755.

Tech shares were having their moment in the spotlight during an unprecedented 'working from home' phenomenon. Over the following months, record government stimulus was administered to avoid a deepened recession.

Infrastructure was an easy target to stimulate the economy. The Australian Government announced a $1.5 billion infrastructure stimulus package for shovel ready projects that could commence within 6 months. Unsurprisingly, ASX-listed miners began to diverge from the broader market.  

Furthermore, the government's Jobkeeper and Jobseeker payments supported continued consumer spending. From August 2020, consumer discretionary shares started to outpace the ASX 200. A great example of this is Eagers Automotive Ltd (ASX: APE), which benefitted from elevated car sales, increasing 129% in the last year.

However, the banks and miners have been the heavy lifters in more recent months. In early May, the big four all reported a bounce back from the prior quarter.

The results acted as an indicator that the worst might be over. Since then, shares in Commonwealth Bank of Australia (ASX: CBA) have rallied to surpass the monumental $100 mark.

But we can't forget the mining giants. An insatiable desire for resources such as iron ore, lithium, and copper has been like rocket fuel to some of the ASX 200's largest companies. Fortescue Metals Group Ltd (ASX: FMG), BHP Group Ltd (ASX: BHP), Pilbara Minerals Ltd (ASX: PLS), and OZ Minerals Ltd (ASX: OZL) are just a few that have enjoyed the boom.

ASX 200: To 8,000 and beyond?

Some market commentators are optimistic after the Australian Bureau of Statistics (ABS) released GDP figures for the March quarter. An increase of 1.8% in GDP compared to the prior quarter and strong iron ore prices have VanEck's Russel Chesler forecasting further highs to come.

Robust growth in company earnings will support equity valuations and the S&P/ASX 200 is likely to rise to 8,000 this year and local shares could outperform the US share market. We are seeing Australian shares trade around record highs, led by gains for the big miners BHP Billiton and Rio Tinto.

If the ASX 200 manages to reach 8,000 points, that would represent a 66% gain from the low set during the COVID crash.

Motley Fool contributor Mitchell Lawler owns shares of Commonwealth Bank of Australia. The Motley Fool Australia has no position in any of the stocks mentioned. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Bruce Jackson.

More on Share Market News

Person handing out $100 notes, symbolising ex-dividend date.
Share Market News

$20,000 invested in CBA and these ASX 200 shares 5 years ago is worth

Did these shares deliver the goods for investors? Let's find out.

Read more »

a business person checks his mobile phone outside a Wall Street office with an American flag and other business people in the background.
Share Market News

Is the 'sell America' trade back?

Institutional investors appear to be at odds with retail investors.

Read more »

Unsure man analysing data on laptop.
Share Gainers

Here are the top 10 ASX 200 shares today

It was a disappointing end to a disappointing week for investors this Friday.

Read more »

Six smiling office colleagues stand in a row and look at the camera.
Broker Notes

Brokers name 3 ASX shares to buy today

Here's why brokers are feeling bullish about these three shares this week.

Read more »

A male investor wearing a blue shirt looks off to the side with a miffed look on his face as the share price declines.
Share Fallers

Why ANZ, Clarity, IGO, and Pilbara Minerals shares are dropping today

These shares are ending the week in the red. But why?

Read more »

Man drawing an upward line on a bar graph symbolising a rising share price.
Share Gainers

Why Betr, Centuria Capital, GR Engineering, and Mach7 shares are pushing higher

These shares are having a good finish to the week. But why?

Read more »

woman holding 'hiring' sign in shop
Broker Notes

How much upside does Macquarie tip for Seek shares?

The broker recently reviewed Australian job ad volumes for May.

Read more »

Ecstatic woman looking at her phone outside with her fist pumped.
Broker Notes

Macquarie tips 50% return for this cheap ASX All Ords stock

Let's see which stock the broker is feeling bullish about this week.

Read more »