Volatility is set to continue in the Australian share-market in the week ahead after a mid-week interest rate cut failed to lift the bourse in the face of US uncertainty, dealers said Friday.
For the week ending September 5, the benchmark SP/ASX200 closed down 258.5 points, or 5.0 percent, at 4,877.1 after miners were hit by lower commodity prices and banks fell following a sharp drop on Wall Street.
Dealers said while the market opened on a relatively positive note on the expectation of an interest rate cut - which the Reserve bank of Australia did Tuesday by 25 basis points to 7.0 percent - the sentiment failed to last after the Wall Street slide.
Shane Oliver, head of investment strategy and chief economist at AMP Capital Investors, said the outlook for the market was rough after shares fell sharply on the back of the weak global lead and falling commodity prices.
"September and October are likely to remain rough for shares as the economic downturn feeds into more profit downgrades, particularly for cyclical sectors, and as bank asset write downs continue," he said. "Historically, September is the worst month of the year for US shares and October is often the worst month of the year for Australian shares.
"So far September seems to be living up to its reputation. Australian shares are likely to under-perform global shares in the short term as resources shares remain under pressure on the back of falling commodity prices." However, Oliver said it was likely that a "decent rally" would get under way in the December quarter.
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