Although the S&P/ASX 200 (Index: ^AXJO) (ASX: XJO) has risen 8% since the beginning of the year, The Australian Financial Review has labeled its performance as "pretty ordinary" compared to international markets, such as the US S&P 500 or the Japanese Nikkei.
Overnight, the Dow Jones (Index: ^DJI) climbed to a fresh all-time high of 15,576.21 points as small caps, financials and transport stocks all continued their rally. According to Bloomberg, such a broad rally hasn't been encountered by the US since 1990.
From the S&P 500, an alarming 460 companies have so far made calendar year gains as the confidence of investors around the world continues to be restored following reassuring comments from Ben Bernanke that quantitative easing will not be tapered off until the economy is ready for it. For the year so far, the S&P 500 is up 19%.
Meanwhile, the Nikkei has increased an incredible 41% this year and looks set to continue those gains after the conservative Liberal Democratic Party won the majority of the nation's Upper House Election.
The local market, on the other hand, is significantly lagging behind its peers. The benchmark index closed above 5,000 points for the first time in more than two months yesterday as its surge continues to heavily rely upon the performance of the big banks and other defensive high-yielding stocks.
Collectively, the banks make up around 30% of the total index. Since the fall of the dollar, foreign investors have withdrawn their money from the banks, which has dragged the economy downwards. Meanwhile, BHP Billiton (ASX: BHP) and Rio Tinto (ASX: RIO) – which also make up an enormous portion of the index – have plunged in value significantly as global demand for commodities has fallen along with slowing Chinese growth.
In addition to this, numerous earnings downgrades have been released in recent times, with the Australian share market delivering an average of 3% earnings per share growth compared to global earnings per share growth of 5% per annum over the last three years.
Foolish takeaway
Although this news may not be good for short-term investors, there are plenty of bargains to be found on the local market if you look hard enough. For instance, you can discover The Motley Fool's favourite income idea for 2013-2014 in our brand-new, FREE research report, including a full investment analysis! Simply click here for your FREE copy of "The Motley Fool's Top Dividend Stock for 2013-2014."
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Motley Fool contributor Ryan Newman does not own shares in any of the companies mentioned in this article.