The big news on the ASX share market this July has been the series of new all-time record highs that the S&P/ASX 200 Index (ASX: XJO) has been regularly hitting.
Having first crossed 7,300 points and then 7,400 points for the first time ever back in June, July has seen the ASX 200 consolidate these gains, and push as high as 7,443 points.
Whilst this is an event that will probably be celebrated by most ASX 200 investors, I think it merits a deeper dive into what's been pushing the index up so high recently.
Well, it's not the big four banks, that's for sure. Take Commonwealth Bank of Australia (ASX: CBA). After hitting $100 a share for the first time ever back in May, CBA shares have gone backwards over July, falling by roughly 0.42% over the month so far.
The other 3 major ASX banks have fared even worse. Westpac Banking Corp (ASX: WBC) takes the crown of thorns, with a 5% reversal since 30 June.
Since the ASX 200 is dominated by these four banking shares (the ASX 200's first, fourth, fifth and sixth companies respectively by market capitalisation), the recent gains must be coming from somewhere else.
CSL Limited (ASX: CSL) perhaps? CSL is the ASX 200's third-largest company. Sure, it's put on 2.13% since 30 June. But that's not enough to counterbalance the ASX banks.
That leaves ASX resources shares like BHP Group Ltd (ASX: BHP) and Rio Tinto Limited (ASX: RIO). These are the ASX 200's second and tenth-largest companies. And they have been on fire lately.
BHP and other ASX miners push up the ASX 200
BHP shares are currently at a record high, having climbed an astonishing 9.9% since 30 June. Rio shares have fared pretty well too, with a 6.3% gain.
We have to mention Fortescue Metals Group Limited (ASX: FMG) too, which is the ASX 200's twelfth largest company. It's put on a very impressive 12.25% since 30 June.
Why have these miners been enjoying such robust gains? We can probably thank robust iron ore prices, as well as a falling Aussie dollar.
Rio's monster dividend that was announced yesterday probably didn't hurt either.
And there you have it, the stars of the share market's July show. Long story short, investors can thank these companies for the record high that the ASX 200 is trading at today.
But this also exposes a potential weakness in the surging ASX share market. If these companies were to drop back to even where they were a month ago, it would be fairly deleterious to the ASX 200's standing as a whole.
It's a very different, and dare I say flimsier, situation than if the index's performance was supported by an equally rising tide with gains across all of the ASX blue chips, rather than just one sector.
Something to keep in mind for anyone exposed to the ASX 200 right now.
