Australian share prices are in line for yet another rough week, with much hinging on the success of a US vote on a massive Wall Street bailout, analysts said. The Australian market endured a roller-coaster ride in the week ending October 3, with the benchmark SP/ASX200 closing down 209.4 points, or 4.3 percent, at 4,695.4.
Head of investment strategy and chief economist at AMP Capital Investors Shane Oliver said more turbulence likely lay ahead for the Australian bourse. "A lot is riding on the success of the US bad debt/economic relief programme to help settle credit markets down.
"On top of this the gathering pace of the global economic downturn will continue to weigh on the profit outlook and economically sensitive sectors like resources and industrials.
Oliver said despite the uncertainty regarding the US debt relief package, the failures of more banks and the darkening economic outlook, the Australian market had been fairly resilient, just falling back to the lows seen in mid-September. Traders said the market had also taken some support from the expectation that the central Reserve Bank of Australia will cut interest rates again following next week's monthly board meeting.
But dealers said while the bailout was one concern, there were also fears that a US slowdown will hurt demand for commodities, something which had helped push Australian mining stocks lower Friday. Head of trading at Shaw Stockbroking Jamie Spiteri said the rescue package appeared more likely to be approved than not.
"But on top of that, all the ongoing economic and statistical indicators out there are not painting a picture of encouragement," he told Dow Jones Newswires.