Australian share prices could rally in the week ahead if investor confidence lifts on the back of the Barack Obama's inauguration as United States president, analysts said Friday. The market had been expected to lift in the lead-up to the January 20 inauguration but this had not yet occurred, said James Foulsham, head of trading at CMC Markets.
For the week ending January 16, the benchmark ASX200 tumbled 184.8 points, or 4.9 percent, to 3,550.9. Foulsham said the Australian market was hopeful Obama's installation as US president would have "a bit of an effect on confidence and sentiment". "We may see a sort of short-term rally on the market with the change-over of government," he said.
"But I think people are realistic and they realise there are big issues at play here. We may see a short-term boost in confidence, a short-term rally in the market, but I don't think it's going to have a significant impact.
"It's a change of government but it's not going to solve any problems straight away." Foulsham said investors would likely hold back until the next reporting season which begins in February.
"A lot of people are waiting on company results, so I think the market is going to go sideways until then," he told AFP.
"I think it's going to be relatively quiet and relatively choppy until we get a bit more clarity from companies on how they've performed over the last six months." Shane Oliver, head of investment strategy and chief economist at AMP Capital Investors, said the Australian bourse mirrored the movements on the US market and also suffered from falling commodity prices during the week.
Oliver said the incoming Obama administration could "help bolster investor confidence, but uncertainty about the depth of the global recession and the timing of the recovery will ensure a volatile ride and a retest of the November lows is possible in the months ahead."