Australian shares may look for encouraging US signs

Australian investors will be looking to the United States for encouraging signs in an otherwise uncertain climate, dealers said. For the week ending February 20 the benchmark S&P/ASX 200 lost 156.7 points, or 4.4 percent, to close at 3,402.4.
Much of the week's activity had mirrored that in the US, particularly among financial stocks, said CMC Markets analyst David Taylor. "When they sneeze, we catch a cold," Taylor told AFP. "The sentiment over there is one of cautiousness and I guess wallowing in uncertainty. Unless we get some really positive economic news out of the US over the next few days it's likely that this sort of treading water in the deep end of the pool will continue."
AMP Capital chief economist Shane Oliver said global markets were at a critical point, having returned to their November 2008 lows.
"This could just be a re-test as part of a bottoming process, or a prelude to another leg down driven by continued uncertainty regarding the economic and profit outlook," Oliver said. "At this point it's impossible to tell which it will be."
It was "one of the most important junctures in the last decade", added IG Markets analyst Ben Potter. "Both the Dow Jones Index and S&P 500 are sitting on major, long term support which coincides with the bear market low of the technology crash in 2003," said Potter.
"A sustained break below this level, from a technical point of view, would be dire." Oliver said there would be a rush of December-half profit reports next week as the corporate reporting season wound up, while data for wages, construction work, business investment and private sector credit was also due for release.
"December quarter business investment data is likely to be weak and business investment plans are expected to be revised down consistent with the slump in business confidence and weakening profits," he said. "Wages data is likely to show that wages pressures are abating ... and with unemployment now on the rise wages growth is likely to slow towards three percent over the year ahead," he added.