The Australian share market is expected to fall sharply amid fears about interest rate rises, inflation, oil prices and the global credit crunch, dealers said Friday. For the week ending May 23, the benchmark S&P/ASX 200 fell 163 points or 2.8 percent to 5,931.0, losing gains from the previous week.
Chief economist at AMP Capital Investors Shane Oliver said a number of factors were weighing on the market, ending a five-week rally.
"After significant gains from the lows in March, share markets now appear to have hit an air pocket," Oliver said. "Our view is that a further fall back is likely in the short term. Shares simply rose too far too fast over the last two months. "The May to October period is often difficult for shares and the full economic fallout from the US housing slump, credit crunch and surging oil prices is yet to be seen."
Oliver said inflation worries also had the potential to upset share markets in the short term. "Australian shares are also yet to see the full fallout from the rise in local interest rates and the strong Australian dollar. As a result shares could fall five percent or more from current levels," he said.
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