RBA cuts improve market outlook

australian equities global equities

23 January 2013
| By Staff |
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The Reserve Bank of Australia's (RBAs) policy initiatives have improved the market outlook for Australian equities, according to Platypus Asset Management's Don Williams.

Williams said Platypus was positive on Australian equities in 2013, in part because the RBA had shown some leadership.

"The RBA has finally got with the program," he said.

Its latest interest rate cut in October was the first pre-emptive cut during the easing period, Williams said, although if it did not have the desired result there would be more cuts in store.

"If the economy doesn't respond to the cuts that have already been made, there will be additional cuts and [the RBA] will just keep going until they…start to get the data that they're looking for," he said.

It gave underlying support to the Australian equity market, according to Williams, who said although earnings were missing and the latest rally had been a result of inflows into global equities, he expected earnings to improve as the downgrade cycle ended.

"This recent spurt is all about our global flow into equities and we're piggy-backing off that," he said.

"We think at some point this year we will move into an earnings upgrade cycle - assuming all the policy initiatives, mainly from the RBA, start to bite and we get some improvement in the domestic economy," he said.

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