Australian share prices are likely to post modest falls as the market consolidates recent gains, dealers said. For the week to October 26 the benchmark S&P/ASX 200 index was down 6.3 points to 6,700.6, after a 42.6 point drop the previous week.
AMP Capital Investors chief economist Shane Oliver said any correction was likely to be short-lived and the market was headed upward in the long term. b"The correction or consolidation in shares that has been underway over the last two weeks may have a bit further to run," he said.
"Shares had run up a bit too fast from their mid-August lows and were due for a rest."
Oliver said investors would remain cautious over the latest bout of worries about the US economic and profit outlook, along with the surge in oil prices to above 90 US dollar a barrel.
"Nevertheless, while shares may be a bit soft over the next few weeks the correction is likely to be relatively shallow and the broad trend in shares is likely to remain up," he said.
"Share-markets are still not expensive, profit growth is likely to remain reasonable and lower US interest rates will provide a strong source of support for shares. As such, shares are likely to provide strong returns into year end and through next year."
Australia is due to release data for new home sales, private credit, building approvals, retail sales and the trade balance next week. However, Oliver said the market would be concentrating on whether the US Federal Reserve dropped interest rates.
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