Australian share prices are expected to fall but the underlying trend is upwards with the result of Saturday's election largely irrelevant to the market, dealers said Friday. Over the week to November 23, the benchmark S&P/ASX 200 index fell 131.7 points or 2.0 percent to close at 6,330.2.
AMP Capital Investors chief economist Shane Oliver said six weeks of declines represented "just another correction in a still rising trend, albeit (that) volatility is on the rise."
A near 25 percent gain since August had pushed the market up too fast, he said. "Fundamentally the Australian share market looks fine," he added.
Concerns about a default crisis in the US subprime mortgage market and an ensuing credit crunch threatening a sharp economic slowdown would continue to weigh on investors, he said. But the Australian market had weathered the storm better than many others and its banks were relatively unscathed, he said.
"While the latest correction in shares may still have a bit more to run, it is likely we will soon get a decent rebound," he said.
Polls predict the Labour opposition will oust conservative Prime Minister John Howard after 11 years in power in Saturday's election. But Labour's economic policies were broadly similar, Oliver said. "In Australia, while a possible change of government may cause some short-term uncertainty ... any impact is likely to be short lived given the lack of major macroeconomic policy differences between the two major parties," Oliver said. The gyrations in the US and global share markets were the key driver of local financial bourses, he said.
The period toward the end of year was normally a strong time for shares, he added. Data due out next week on construction, capital spending and the current account will provide guidance on economic growth. Data for new home sales and private sector credit will also be released.
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