Australian All Ordinaries Tracks Commodity Prices

The Australian All Ordinaries (^AORD) has corrected from all-times highs set in May 2006. The index experienced a three-stage upside before it moved to the downside.

Because the index is heavily weighted with mining and natural resource stocks such as Rio Tinto (RTP) and BHP Billiton (BHP), it tracks the price patterns found in commodities like aluminum, coal, copper, gold, iron ore, lead, natural gas, nickel, oil and zinc. Consequently, when prices of commodities rise, the index will rise and when they fall, the index will follow them down.

One way to play the Australian stock market and indirectly own commodities is to buy iShares MSCI Australia Index (EWA), a low-fee exchange-traded fund (ETF). EWA's fees are particularly low compared with many so called natural resource mutual funds.

For more information about Australian stocks see the Australian Stock Exchange.

Related Articles:

Australian Stock Market Is On the Upside
Copper Trades At Top of 60-Year Price Channel
Hot Commodities by Jim Rogers is a Good Read
Price Upsides Often Occur in Three Stages

Posted October 4, 2006.