Share Fall Not Disastrous For Australia
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Despite the Australian and US sharemarkets suffering the sharpest fall since immediately after September 11, 2001, analysts maintain the local economy remains strong on the back of retail sales figures.Investors are bracing for the possibility of another sharp plunge on the Australian share market today after Friday’s $41 billion losses.
The market closed 2.8 per cent down on Friday, the biggest one-day drop since September 2001, after shares on Wall Street finished the week down more than 200 points, or 1.5 per cent.
The fall is expected to continue as trading gets underway this morning
“I think for investors that a wise place is on the sidelines at the moment,” said Commsec chief economist Craig James.
“We are going to see further weakness in the Australian share market, probably open up this morning round about 60 to 70 points down and then we’ll take direction from the Asian markets over the remainder of the day.
“Really it will be a case of watching developments in the US over this week.”
ANZ Bank senior market economist Cherelle Murphy said the heavy losses on the New York Stock Exchange are not good news for the Australian sharemarket.
“A bad night on Wall Street is never good for our market and it is quite likely that we’ll see a continuation of the losses on Friday,” she said.
“Whether or not that continues through the week however, is not certain.”
But Murphy says the overall economy is strong enough to sustain further losses.
“There’s a lot going on this week,” she said.
“We’ve got some pretty important data locally, including the retail sales numbers, trade balance and also we think that we’re not in for a disastrous period here.
“The Australian economy is in good shape and that is likely to underpin earnings through the current season.”
But for now no-one is saying the bull market is over, with the Australian sharemarket hitting a liftetime high just a fortnight ago.
And Commsec still believes the All Ordinaries Index could get close to the 6,600 points by the end of the year.