The Australian stockmarket just broke its previous all-time high record — but is just catching up to other global economies

* The Australian stockmarket is rallying, breaking its all-time record — one that was set in November 2007 before the global financial crisis (GFC) hit. * The ASX All-Ordinaries, which tracks the share prices of Australia's largest 500 listed companies, broke 6853.6 points in the first hour of trading on Wednesday. * It comes at the same time that the Australian economy is looking weak, raising question marks about how long the local sharemarket will continue to drive higher.* * *Investors were celebrating on Wednesday as the ASX All Ordinaries Index, which measures the share prices of Australia's largest 500 companies, soared to reach an all-time high.That record was set in November 2017 at 6853.6 points, right before the global financial crisis (GFC) sent sharemarkets around the world -- including Australia's -- tumbling.Almost 12 years later, Australia's biggest companies have finally surpassed that level, rising above the record at around 10:30 a.m. on Wednesday \-- closing just above that figure at the end of the trading session.The related ASX 200 index, which measures the largest 200 companies, closed around 52 points shy of its own record of 6828.7. The fact that the record took 12 years to break puts us well behind the rest of the world, but for a good reason, Elio D'Amato, market analyst and executive director of research firm Lincoln Indicators, told Business Insider Australia."Frankly, it's just our market really catching up to where global economies are, most of which have moved far and beyond that since 2007, and yet, our markets have languished and sort of chugged along in that time," D'Amato said. That's partly because Australian companies pay out some of the biggest dividends in the world. Essentially that sees investors get paid more out of the company purse, which is profitable for shareholders but restricts the ability of businesses to expand at the same rate as their US peers for example. Those dividends, included in an accumulation index, actually mean Australia surpassed its record highs years ago.https://twitter.com/ShaneOliverAMP/status/1153888498463625216That technicality aside, however, this current rally, is driven by a few key factors, according to D'Amato. "The banking sector is recovering after it was belted down so heavily last year, with interest rates at anemic levels. We've also had a range of earnings upgrades coming off a low basis, so I think you've started to see a bit of love come back into those stocks," he said. "On top of that, the election result means that retail investors and those funds that have a franking credit focus can still benefit from those credits and they've invested accordingly. Plus. you've got high iron ore prices that are driving the big miners which has also been a huge plus for the ASX. Really that's what has been the final catalyst that's got us over the line from a broader index perspective."Interestingly, Australia's market is hitting all-time highs -- suggesting business is doing better than ever -- at the same time that the economy is actually very weak. "There is probably a little bit of sentiment that's driving a market as opposed to a few underlying factors," D'Amato said. That can be a dangerous thing. Just as investor whims can drive a market higher, it can also cause it to crash. It was sentiment that saw markets globally sell-off in August and throughout the second half of last year for example. "That sentiment was scary. And everyone was worried about what companies weren't telling us. In the end, there wasn't anything to be worried about and, so we saw this rapid recovery, I mean, it's been incredibly swift relative to where the lows were in December," D'Amato said. The risk that sentiment could again take hold of the market negatively would be amplified if some of those drivers die off. Iron ore prices, for example, have remained high since several accidents caused Brazillian miners to halt their operations. "One immediate risks to the index would be if iron ore prices go through the floor if Brazil comes back online and starts producing double what they were before, that will obviously have a big impact here obviously," D'Amato said. That could quickly see the market topple as share prices and investors sell-off as a result. Ultimately while Wednesday's record high is a win for investors, it should be taken with a grain of salt, D'Amato said, given there's no guarantee of where the market will go next. In the end, long-term investors are rewarded for staying the course. "Over the last 20 years, there's been 15, positive years and five dead ones from a total return perspective. So the fact of the matter is, if you're out of the market, you just going to cost yourself because, you know, no one can predict the absolute bottom," he said. Or the top for that matter. Correction: A previous version of this article mistakenly referred to Elio D'amato as founder of Lincoln Indicators, rather than executive director. It has subsequently been amended.

• The Australian stockmarket is rallying, breaking its all-time record — one that was set in November 2007 before the global financial crisis (GFC) hit.

• The ASX All-Ordinaries, which tracks the share prices of Australia's largest 500 listed companies, broke 6853.6 points in the first hour of trading on Wednesday.

• It comes at the same time that the Australian economy is looking weak, raising question marks about how long the local sharemarket will continue to drive higher.

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Investors were celebrating on Wednesday as the ASX All Ordinaries Index, which measures the share prices of Australia's largest 500 companies, soared to reach an all-time high.

That record was set in November 2017 at 6853.6 points, right before the global financial crisis (GFC) sent sharemarkets around the world -- including Australia's -- tumbling.

Almost 12 years later, Australia's biggest companies have finally surpassed that level, rising above the record at around 10:30 a.m. on Wednesday -- closing just above that figure at the end of the trading session.

The related ASX 200 index, which measures the largest 200 companies, closed around 52 points shy of its own record of 6828.7.

The fact that the record took 12 years to break puts us well behind the rest of the world, but for a good reason, Elio D'Amato, market analyst and executive director of research firm Lincoln Indicators, told Business Insider Australia.

"Frankly, it's just our market really catching up to where global economies are, most of which have moved far and beyond that since 2007, and yet, our markets have languished and sort of chugged along in that time," D'Amato said.

That's partly because Australian companies pay out some of the biggest dividends in the world. Essentially that sees investors get paid more out of the company purse, which is profitable for shareholders but restricts the ability of businesses to expand at the same rate as their US peers for example.

Those dividends, included in an accumulation index, actually mean Australia surpassed its record highs years ago.

https://twitter.com/ShaneOliverAMP/status/1153888498463625216

That technicality aside, however, this current rally, is driven by a few key factors, according to D'Amato.

"The banking sector is recovering after it was belted down so heavily last year, with interest rates at anemic levels. We've also had a range of earnings upgrades coming off a low basis, so I think you've started to see a bit of love come back into those stocks," he said.

"On top of that, the election result means that retail investors and those funds that have a franking credit focus can still benefit from those credits and they've invested accordingly. Plus. you've got high iron ore prices that are driving the big miners which has also been a huge plus for the ASX. Really that's what has been the final catalyst that's got us over the line from a broader index perspective."

Interestingly, Australia's market is hitting all-time highs -- suggesting business is doing better than ever -- at the same time that the economy is actually very weak.

"There is probably a little bit of sentiment that's driving a market as opposed to a few underlying factors," D'Amato said.

That can be a dangerous thing. Just as investor whims can drive a market higher, it can also cause it to crash.

It was sentiment that saw markets globally sell-off in August and throughout the second half of last year for example.

"That sentiment was scary. And everyone was worried about what companies weren't telling us. In the end, there wasn't anything to be worried about and, so we saw this rapid recovery, I mean, it's been incredibly swift relative to where the lows were in December," D'Amato said.

The risk that sentiment could again take hold of the market negatively would be amplified if some of those drivers die off. Iron ore prices, for example, have remained high since several accidents caused Brazillian miners to halt their operations.

"One immediate risks to the index would be if iron ore prices go through the floor if Brazil comes back online and starts producing double what they were before, that will obviously have a big impact here obviously," D'Amato said.

That could quickly see the market topple as share prices and investors sell-off as a result.

Ultimately while Wednesday's record high is a win for investors, it should be taken with a grain of salt, D'Amato said, given there's no guarantee of where the market will go next. In the end, long-term investors are rewarded for staying the course.

"Over the last 20 years, there's been 15, positive years and five dead ones from a total return perspective. So the fact of the matter is, if you're out of the market, you just going to cost yourself because, you know, no one can predict the absolute bottom," he said.

Or the top for that matter.

Correction: A previous version of this article mistakenly referred to Elio D'amato as founder of Lincoln Indicators, rather than executive director. It has subsequently been amended.