OPINION: Australian share trading is down sharply this year, and the resilient US economy is to blame.
How quiet? Summer holidays quiet. Repeated days with only $5 billion or $5.5 billion in Australian shares traded, which is about 20 per cent less than last year.
Why? Because no one knows what to do, according to Bell Potter’s Richard Coppleson, who has watched volumes closely for years for a read on investor sentiment.He says it all boils down to the prospects of a US recession. Major institutions globally have followed the same recession playbook for years, and that playbook says the economy should be contracting. The usual indicators all line up – bank failures, high interest rates, for example – but the recession is yet to hit.
The trading frenzy started in March 2020, when the pandemic was causing chaos. It got so busy one week that month that the ASX had its operatives working over a weekend to settle a backlog of trades. While volumes backed off soon after, they largely remained elevated throughout the 2021 and 2022 financial years.Average ASX cash equities daily trading volumes were the worst in three years in January, and four years in February, on Coppleson’s numbers.
But that hasn’t happened – thanks to the worrying about the US economy. Volumes in May were the worst in four years, while June’s were the worst in two years. The start of July was the quietest for trading desks since the summer holidays in January.
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