Australian share prices are likely to pause for breath in the coming week after enjoying a recent record-breaking rally which saw key indices break the 5,000 points barrier, dealers said.
"With the Australian share market up nine percent since mid-February and two percent or so over the last week, the market is due for a pause," chief economist at AMP Capital Investors Shane Oliver said.
For the week ending April 7, the benchmark SP/ASX 200 rose 103.2 points or 2.01 percent to 5,232.9 points, following on from the previous week where the index closed at a record 5,129.7.
Oliver said the broad trend for the market was likely to remain up, continuing its run since it broke through the psychological 5,000 level for the first time last month.
"Fair value for the ASX 200 is around 5,600 points so the market still has a fair way to go before it can be considered expensive," Oliver said.
"Profit growth this year is likely to be solid at around 15 percent and the macro backdrop of reasonable economic growth, benign inflation and reasonably stable interest rates is supportive," he added.
Oliver said April was typically a strong month for the local market while strong capital returns and dividend payments would provide buying support for Australian shares.
"However, while the trend is likely to remain up, investors should be prepared for a volatile ride as profit growth slows and share markets undergo ongoing bouts of paranoia about inflation, global interest rates, commodity prices and oil prices," he said.
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