Does the S&P/ASX 200 Index (ASX: XJO) just follow the United States markets? Do we even need to watch the ASX when we could really just watch the Dow Jones or the Nasdaq?

These are the questions we’ll be answering today.

If we look at the recent performance of the ASX 200 index (the largest 200 Australian shares) in conjunction with the S&P 500 Index (the largest 500 American shares), some striking resemblances do become apparent.

Just take a look at this graph of the ASX 200 – represented here by the iShares Core S&P/ASX 200 ETF (ASX: IOZ).

Now, compare this with the S&P 500 – represented here by the iShares S&P 500 (AUD Hedged) ETF (ASX: IHVV)

Look familiar?

Digging a little deeper, the ASX 200 and S&P 500 both had their 2020 peaks on 20 February (Australian time).

Then, the ASX 200 fell 36.53% between 20 February and 23 March where it found its bottom for 2020 so far.

The S&P 500? It fell 33.92% over the same period and also found its lowest point for the year on 23 March.

Since then, the ASX 200 has risen approximately 35% off these lows. The S&P 500 is up ~43%.

So we have a same-day peak, a same-day trough and very similar gains and losses in between for both the US and Australian markets in 2020.

My forensic conclusion? Eerily similar.

What does this mean for ASX 200 investors?

As much as we might like to think that our own Aussie markets are independent of the US, the data doesn’t suggest this conclusion.

Of course, there will always be localised nuances that move each market independently of the other. But on the ‘big issues’, it would appear that the American dog is wagging the ASX tail most of the time.

That, in turn, means that we all need to be watching the US markets like a hawk in my view (or more accurately, like a dove). The US Federal Reserve has been pumping an unprecedented amount of cash into the American financial system – far more than our own Reserve Bank of Australia (RBA) has been doing here. This, I think, is partly responsible for the massive rally in US shares we have seen over the past 2½ months. And it will also likely be the most influential force driving the markets over the rest of the year, in my opinion.

So if you’re aspiring to be a ‘serious investor’ but you don’t take an active interest in what the US markets are doing, it’s probably a good idea to change that habit. As much as we’d like to think of ourselves as ‘independent’ of the US, the data shows this is not really the case.

More reading

• ASX 200 up 0.45%: Harvey Norman declares special dividend, gold miners race higher
• Why you can’t afford not to invest in ASX 200 shares in 2020
• These ASX shares could defy the market sell-off this morning
• Is the Woodside Petroleum share price cheap today?
• 5 things to watch on the ASX 200 on Wednesday

Motley Fool contributor Sebastian Bowen has no position in any of the stocks mentioned. The Motley Fool Australia has no position in any of the stocks mentioned. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Scott Phillips.

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As I’ve mentioned here previously, day trading can generate strong returns, but statistically it creates far more losers than winners.

As a result, if you’re interested in building your wealth, I would suggest you skip trading and focus on buying and holding ASX shares over the long term.

With that in mind, I have picked out three ASX shares that I believe could provide strong returns for investors over the next decade and beyond:

a2 Milk Company Ltd (ASX: A2M)

The first ASX share that I would buy is a2 Milk Company. I believe it could be a fantastic long term investment option due to the long runway for growth it has thanks to its expanding fresh milk footprint and the growing demand for its infant formula. The latter is experiencing particularly strong demand in the China market. And while its sales in the country have grown very strongly in recent years, it still only has a reasonably small market share. I expect it to capture a greater slice of the key market in the future and for this to drive strong earnings growth.

Kogan.com Ltd (ASX: KGN)

Another ASX share to consider buying is Kogan. It is a growing ecommerce company which has been benefiting greatly from the structural change that is happening in the retail industry. This change has been accelerated by the pandemic and looks set to underpin strong earnings growth for Kogan for many years to come. In addition to this, this morning the company announced a $115 million capital raising. It intends to use the funds to acquire businesses that will add value and drive further growth.

Pushpay Holdings Group Ltd (ASX: PPH)

A final ASX share to look at buying is this donor management platform provider. Over the last few years Pushpay has carved out a leadership position in the church sector. This has led to increasing demand for its offering and driven exceptionally strong sales growth. The good news is that it has a sizeable market opportunity to grow into. And combined with a recent acquisition and the benefits of scale, I believe its earnings will grow at a rapid rate over the coming years.

More reading

• 3 ASX shares to buy for the big shift to contactless payments
• 3 companies with great intangible asset moats
• ASX winners and losers from last week’s rally
• Kogan announces $115 million capital raising to fund future acquisitions
• Can Kogan.com survive Amazon?

James Mickleboro has no position in any of the stocks mentioned. The Motley Fool Australia’s parent company Motley Fool Holdings Inc. owns shares of PUSHPAY FPO NZX. The Motley Fool Australia owns shares of and has recommended Kogan.com ltd. The Motley Fool Australia owns shares of A2 Milk. The Motley Fool Australia has recommended PUSHPAY FPO NZX. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Scott Phillips.

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