Australian share prices are expected to face another volatile week after the market slumped and surged in line with global bourses on jitters about the US economy, dealers said on Friday.
They said investors will be keeping one eye on overseas markets for their leads, especially with the US Federal Reserve ending Wednesday amid growing concerns at problems in the US housing market.
The fear is that if the fallout from growing mortgage defaults hits US consumer spending, then the wider economy could be in trouble, which would be bad news for all.
For the week to March 16, the benchmark SP/ASX 200 eked out gain of 6.1 points or 0.10 percent at 5,836.3 after losing more 2.0 percent on Wednesday in a global markets sell-off sparked by the US housing lead.
Head of investment strategy and chief economist at AMP Capital Investors Shane Oliver said Australian and global markets had endured a rough week but that the volatility may not be over. "Our assessment remains that it is too early to call the all clear for share markets," he said.
"Uncertainty over US and global growth may linger for a while yet. The crisis in the US mortgage market has further to run; investor sentiment has yet to reach bearish extremes that normally signal market bottoms and the last three significant corrections in global/Australian shares (March/April 2005, October 2005 and May/June 2006) all lasted about a month or so.
"Nevertheless, our view remains that recent share market weakness is just another correction in an ongoing bull market."
Oliver said the Australian market remained well above recent lows and has been helped over the last week by strength in consumer and health care stocks as well as resources shares bouyed by strong commodity prices. Valuations remained reasonable and profit growth was solid, he said.
"As such, global and Australian share markets are likely to provide solid gains for the rest of the year, notwithstanding occasional bouts of volatility like at present," he said.
CommSec chief equities economist Craig James said recent jitters had dampened celebrations about the bull market's fourth consecutive year.