You’ve undoubtedly heard of the All Ordinaries Index, or simply the All Ords, if you’ve looked at the Australian stock market for any length of time. The All Ords, one of Australia’s oldest stock indices, is a key indicator of market performance. By examining its graph, one can gain important knowledge about investment trends and the state of the Australian economy.
What is the All Ordinaries Index?
The All Ordinaries Index is a market-capitalization-weighted index that tracks the performance of the 500 largest companies listed on the Australian Securities Exchange (ASX). This includes a wide cross-section of sectors — from financials and mining to healthcare and tech.
It’s not as selective as the ASX 200 (which tracks the top 200 companies) but still offers a broader snapshot of the market. It is often used as a benchmark for overall market sentiment and investment trends.
Reading the All Ords Graph
When you look at a graph of the All Ords, you’re seeing the aggregate performance of 500 companies over time. Here’s what to pay attention to:
1. Long-Term Trends
A long-term view of the All Ords graph shows how the index has grown (or shrunk) over decades. Historically, it has shown strong growth, though with significant dips during global crises — such as the 2008 GFC or the 2020 COVID-19 pandemic.
2. Short-Term Movements
Daily or weekly movements in the graph can reflect investor reactions to:
- Economic data (GDP, inflation, unemployment)
- Interest rate changes (from the RBA)
- Global events (wars, recessions, pandemics)
- Company earnings reports or scandals
3. Market Corrections vs. Crashes
Not every dip means disaster. A market correction (a drop of 10% or more) is healthy and expected. A crash, however, is more severe and often accompanied by panic selling and long-term economic consequences.
Why Does the All Ords Matter?
- Investor Confidence: A rising All Ords graph suggests growing confidence in the economy and future profitability.
- Superannuation Performance: Since many Aussie super funds are invested in ASX-listed companies, All Ords movements affect retirement savings.
- Economic Indicator: Governments and analysts watch the All Ords closely as a proxy for business sentiment and economic health.
What Affects the All Ords?
Several factors influence the movement of the All Ords graph:
- Commodity prices, especially iron ore and coal
- Interest rate decisions by the Reserve Bank of Australia
- Global market sentiment, especially from the US and China
- Currency exchange rates, particularly the AUD/USD
- Geopolitical risks and trade relations