The Australian share market had its best start to any year since 1994, with the All Ordinaries Index gaining 5.2% for the month of January (closing the month at 4,325.7 points).

Aussie shares outperformed most major global markets in January – a trend I expect to see continue throughout 2012.  Global shares performed well with the Dow Jones Index gaining 3.4%, the FTSE gaining 2.0%, the Nikkei 225 gaining 4.2% and the Hang Seng gaining a staggering 10.6% for the month.

December capped off a very poor year for investors.  2011 started badly with natural disasters (severe floods in Queensland and nuclear disaster at the Fukushima power plant) however this was only a teaser for what was to follow with a European sovereign debt crisis and issues never before encountered (i.e. a common monetary policy with differing government fiscal policies). 

The All Ordinaries Index fell 15.2% for the year and closed December at 4,111.00 points – down 1.8% in the month of December.  Global share markets were subdued in December with the Dow Jones Index gaining 1.4%, the FTSE gaining 1.2%, the Nikkei 225 gaining 0.2% and the Hang Seng gaining 2.5%.

Each month I seem to be writing the same thing.... more volatility due to European sovereign debt issues!  Again the political posturing in Europe weighed on the performance of the Australian share market. 

The All Ordinaries Index fell 4.0% to close November at 4,184.70 points.  However, three substantial economic developments announced in quick succession last night may see the Australian share market recover the majority of its November losses today.
 
On Wednesday morning Europe time, central banks around the globe announced a co-ordinated plan to make funding cheaper for European banks.  The announcement came after China indicated it would loosen monetary policy by lowering the reserve requirement ratio for banks.  In addition, a report on the US labour market showed private-business employment had the largest monthly gain this year.