With the ASX200 on a bull run, is it the right time to buy into shares?

Australian shares are trading at all-time highs, enriching investors and swelling superannuation accounts, and analysts say there could still be more to come.

Buoyed by weaker inflation and lower interest rates around the world, and the return of a business-friendly US president, the Australian share market is enjoying a $200 billion bull run and heading into one of its seasonally strongest months with a tailwind.

As measured by the S&P-ASX200, the mainstay share gauge covering the country’s biggest listed companies, the market wound up its last November trading day on Friday to crystallise a gain of 3 per cent for the month after a series of record highs over the past week.

Despite the country’s benign economy, Australian shares are up 11.1 per cent for 2024 so far and nearly 20 per cent over the past 12 months — easily bettering their average annual return of 8.5 per cent over the last 10 years.

Stocks have added more than $240b in value since the beginning of the year to more than $3.06 trillion.

While there are concerns many shares are already overvalued, experts believe the market will keep rising well into 2025 and see potential buying opportunities in those sectors such as mining that have not risen as much as banking and technology.

Their optimism is backed by history.

December is traditionally one of the strongest months for shares, thanks to what is known as the “Santa rally”. More encouragingly, the next five months historically account for as much as two-thirds of the Australian stock market’s annual gain.

AMP Capital’s chief economist and head of investment strategy, Shane Oliver, sees “reasonable” investment returns over the next six months, but warns it could get rocky, depending on how Donald Trump starts his next US presidency early next year.

“Bull markets are characterised by relatively steady advances, and then sharp pull-backs,” Dr Oliver said. “The seasonal pattern from here is quite strong.

“I suspect we rally in towards Christmas, January starts off OK and then Donald Trump takes office and we get some wobbles.

“Our overall assessment remains that the trend is still up, including for Australian shares, but expect a more volatile and constrained ride.”

Commonwealth Bank’s CommSec, Australia’s biggest share trading platform, is also tipping more market records into 2025, despite weakness in energy and mining stocks, as investors wait for an expected run of interest rate cuts by the Reserve Bank of Australia from about May.

“The economic backdrop is improving into next year, and that’s likely to support the share market, particularly around expectations for rate cuts,” chief economist Ryan Felsman said.

CommSec sees the market hovering around 8500 to 8600 points in the first half of 2025, up from the S&P-ASX200’s Friday close of 8436.2.

Mr Felsman reckons one of the big questions is whether more investors will rotate out of banking and tech stocks with their profits and reinvest into cheaper resources stocks, which have been hurt this year by weaker commodity prices on the back of economic uncertainty in China, their biggest customer.

While the tech sector has gained 56 per cent this year and the banking sector 34 per cent, the energy and mining sectors have lost 19 per cent and 13 per cent respectively.

However, Mr Felsman said CommSec expected China to launch more targeted measures to rejuvenate its economy early next year, providing a fillip to resource stocks.

“That will probably coincide with the release of president Trump’s policies … and that could provide some support for the mining sector,” he said.

Despite the mixed share outcomes, Mr Felsman noted plenty of stocks had recorded “cracking” gains.

Mesoblast, a biopharmaceutical company developing stem cell products, has skyrocketed 471 per cent this year after catapulting to $1.77 from 31¢ in January.

With footholds in the US, buy now, pay later group Zip Co and family tracking app Life360 are seen as beneficiaries of Mr Trump’s proposed tax cuts and business deregulation; they’ve gained 438 per cent and 235 respectively.

Returns elsewhere have been more subdued, but still easily better bank deposit rates.

Electronics retailer JB Hi-Fi and Mexican fast-food chain Guzman Y Gomez have shrugged off cost-of-living concerns, Qantas has benefited from the demise of Rex Airlines and mid-tier gold producers such as Ora Banda Mining and West African-focused Perseus Mining have shown that not all miners are in the red for the year.

Some of the year’s best stocks/percentage increase in value since December 31

Mesoblast 471 per cent

Zip Co 438 per cent

Life360 235 per cent

Ora Banda Mining 202 per cent

Pinnacle Investment 132 per cent

JB Hi-Fi 71 per cent

Qantas 63 per cent

Guzman Y Gomez 43 per cent

Perseus Mining 43 per cent

CBA 42 per cent