Analysts predict sluggish 2010
Share market analyst Dale Gillham has warned the recent bullish nature of the market is unsustainable, having been buoyed by the Government stimulus and demand from first home buyers.
Gillham, chief analyst at Wealth Within, said the bullish conditions present since March this year have represented a bear market rally rather than a new bull market.
He believes the All Ordinaries Index is likely to drift sideways in 2010 before heading down into the first half of 2011. He predicted the Australian share market would rise in the first quarter of 2010 to around 5,400, followed by a yearly low in March or April.
On the upper side of his expectations, Gillham said it is possible that the All Ordinaries Index could stretch to around 6,000 points by mid 2010, followed by a 12-month low in mid 2011.
He did note, however, that the bullish nature of the market is “unsustainable given that it has been predicated on the Government stimulus package and demand for housing from first home buyers”.
“Over the coming 12 months it is possible that the market will be more bearish as spending slows, unemployment rises and more Australians begin to suffer mortgage stress,” Gillham said.
He pointed to the information technology, materials and consumer staples sectors as “solid performers” in the coming months, while looking to the energy and healthcare sectors for opportunities in the medium to longer term.
“I also believe the Australian dollar will remain strong against the US dollar as the US currency is likely to come under a lot of pressure in the coming years, which could see a shift to it being less dominant in the world economic arena,” Gillham said.
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