Australian share prices face continued volatile trade next week with investor confidence still shaky following recent sell-off sparked by problems in the US sub-prime mortgage market, dealers said Friday.
They said the region's strong economic fundamentals should shield Asia from the worst of the expanding crisis in the US but the resulting uncertainty has unnerved investors and may continue to do so for some time. For the week ending August 3, the benchmark S&P/ASX 200 was down 61.9 points 1.0 percent to 6,021.0 after losses of 5.3 percent the previous week.
"While the market has still got a quite positive sentiment about the economic outlook, I think that's being tempered by the feeling in the short-term that with the debt situation in the US, there could be more developments that may have a dramatic short-term impact on the market," analyst at CMC Markets, David Land, said.
Further losses were possible in the short term, particularly as the market entered the seasonally weak August to October period, AMP Capital Investors head of investment strategy Shane Oliver said. "Given the tendency for corrections to be larger and sharper the more advanced the bull market becomes, the correction this time around could potentially be somewhere around 15 percent," he said.
CMC Markets senior dealer James Foulsham said the immediate test for the market will be what the reaction is later Friday to the key non-farm payroll figures in the United States.
"I think a lot of it will depend on that. If those figures come in pretty strong, we could expect the market to stabilise," he said.