As the Australian sharemarket inches closer to a fresh record, analysts are scratching their heads about how the benchmark got here.
Just two years ago, the S&P/ASX 200 was trading on a 12-month forward price-to-earnings ratio of 14.6 times, smack bang in line with its long-term average.
Since then, the outlook for corporate profits has deteriorated, dividends have fallen and bond yields have surged, while the cash rate is unchanged. Yet, the benchmark index is now trading on an eye-watering forward PE of 18.3 times, and sits just 3 per cent away from its February record.
Source: https://www.afr.com/markets/equity-markets/investors-baffled-as-asx-s-remarkable-rebound-defies-fundamentals-20250523-p5m1mi