Australia 200 Index Trades below 5000
On Thursday 3 July 2008, the benchmark SP/ASX200 closed at 4998. It was the first time since September 2006 that the ASX200 had finished below the 5000 level.
In September 2006 BHP Billiton was sub-$25 a share while takeover target Rio Tinto was trading below $70. Since then the ASX200 has been driven largely by Chinese demand for our resources.
Resource stocks had been underpinning the ASX200, however there are fears that slowing growth in the US may carry over to China; in turn slowing Chinese appetite for our resources. The recent downturn in resource stock prices could have been worse if BHP Billiton and Rio Tinto had accepted smaller price increases on iron ore prices with China's key steel maker Baosteel.
The price earnings ratio for the broader market is now at 12-year lows. Stocks have been discounted with investors factoring in future earnings gloom for many sectors. Have investors discounted the market too heavily?
Whatever the future for the Australian Index, IG Markets CFD traders are well placed to take advantage of future movements with the ability to go long or short.
Trading indices gives you broad market exposure, helping you avoid putting all your eggs in one basket by trading on one stock. IG Markets also offers a wide range of international indices.
Limit your risk
Worried about volatility? With IG Markets you can use Limits and Stops as normal on index CFDs, along with our Guaranteed Stops and Trailing Stops to limit your risk without capping any potential profit.
There is no commission to pay with CFDs on indices, just our competitive dealing spread.
For a full list of the Indices you can trade on through IG Markets, visit Contract Details or find out more about Risk Management page.
The above comments do not constitute investment advice and IG Markets accepts no responsibility for any use that may be made of them.