Australian share prices were likely to be range-bound in the coming week, as the market moves between optimism at signs of recovery and fears over bankruptcy and swine flu, dealers said. For the week ending May 1 the benchmark S&P/ASX 200 gained 57.3 points, or 1.54 percent, to close at 3,769.6.
"If you look at what the market's been doing for the last week or two it's been really sort of range-bound," said James Foulsham, dealer with CMC Markets. "There's been a few merger and acquisition sort of stories that have been propping it up and there have been a few negative influences like swine flu and Chrysler (which filed for bankruptcy in the US)," he told AFP
"I wouldn't be surprised if that continues for a little bit longer unless we get some real significant news that's going to push the market one way or the other," Foulsham said.
He said all eyes would be on Macquarie Bank next week, after it posted a full-year profit of 871 million dollars - well below guidance and less than half of last year's 1.8 billion. Macquarie, Australia's largest investment bank, remains in a trading halt at 33.48 amid speculation of a 540 million dollar capital raising, and Foulsham said reaction to the placement would set the tone for trade early in the week.
Shane Oliver, chief economist with AMP Capital Investors, said the central bank was likely to keep interest rates on hold on Tuesday, and speculation would continue to mount about the annual budget, due on May 12. "We expect key elements to be another downwards revision to the government's GDP growth forecast for 2009-10 from 0.75 percent currently to a contraction of 0.5 percent to factor in recession this calendar year," Oliver said.
Unemployment was also likely to be revised upwards to eight or nine percent, and a third stimulus package was expected, he said. "The resilience of share markets in the face of bad news - swine flu, capital raisings, ongoing bank problems, profit downgrades and Chrysler's bankruptcy - is a positive sign," Oliver said.
"The share market rally over the last two months is clearly proving more durable than many of the bears can stand and, as such, some of them are being forced to throw in the towel and climb aboard, which of course partly explains why shares keep surprising on the upside."