A quick chart that examines the index percentage return of the ASX 200 versus the S&P 500, priced in US Dollars, from the 2009 GFC lows. As you can see the ASX 200, thanks to a sharp recovery in the AUDUSD between 2009-2011, actually outperformed the S&P 500 until the early parts of 2012. From there to May 2013 the two indices basically tracked each other before suddenly diverging with the S&P 500 continuing to move higher while the ASX 200 lingered at levels first hit in early 2011. Cast your mind back to May 2013 and a significant monetary policy development occurred – the Fed first hinted that they were looking to taper asset purchases, commonly know as QE. That moment saw the USD become a far more desirable destination for foreign and US-originated capital, heaping pressure on markets such as the AUD-denominated ASX 200. While there are other factors┬áthat explain the divergent performance, monetary policy settings, hence currency rate movements,┬áhave largely dictated affairs since the taper tantrum occurred in May last year.


Share This