Australian share prices are expected to fall as a correction continues after last month's record highs, dealers said Friday. Over the week to November 16 the benchmark S&P/ASX 200 index fell 66.7 points or 1.3 percent to 6,461.9.
AMP Capital Investors chief economist Shane Oliver said a number of factors would weigh on shares over the next few weeks. They included the impact of the mortgage default crisis in the US subprime sector, high oil price and the speed with which the US Federal Reserve cuts interest rates.
"So the correction in shares may have further to run, possibly with another five percent," he said. Oliver said the downturn was likely to be modest and the trend for share prices would remain upward in the longer term.
"Share markets are still not expensive, profit growth is likely to remain reasonable and further falls in US interest rates are inevitable and this will provide a strong source of support for shares," he said.
"Furthermore, we are coming into a seasonally strong time of year for shares."
Macquarie Equities private client adviser Jospeh Youssek said volatility would remain a key theme next week as the fallout from the subprime crisis and concerns about the US economy keep investors on edge.
"It's just going to oscillate up and down until we get a little bit more direction with regard to exactly what's going to happen with the credit crunch," he said. No major Australian economic data or company earnings reports are scheduled for release next week.
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