Australian share prices are expected to recover from recent losses as the market stages a late rally ahead of year's end, dealers said. AMP Capital Investors chief economist Shane Oliver said the market had posted three consecutive weekly losses but moves by the world's central banks to address the global credit crunch should boost investor confidence.
Oliver also said the market traditionally rallied in the second half of December as New Year approached. "Shares have hit another air pocket on the back of worries about credit markets and the global economic outlook," she said.
"But they are still likely to move higher into year end on the back of positive valuations relative to bonds ... prospects for further global monetary easing and positive seasonal forces." Oliver said that December had been the strongest month of the year for the Australian market in the past two decades.
"Usually all of the strength comes in the second half of the month," he said. "Historically, January is also a strong month." For the week ending December 14, the benchmark S&P/ASX 200 index fell 163 points or 2.4 percent to 6,491.7.
No major economic data releases or company results are scheduled for next week, with most attention likely to focus on the Reserve Bank's monthly bulletin, which investors will scour for clues on monetary policy thinking.