US lead points to early fall

Published in the Daily Telegraph, September 2009

The Australian share market is likely to open lower today following a poor lead from Wall Street where shares fell for a third consecutive day on Friday, with poor economic data prompting a sell-off.

The Dow Jones Industrial Average dropped 42.25 points to finish the week at 9665.19, the Nasdaq dropped 16.69 points to 2090.92, and the Standard & Poor's 500 index shed 6.40 points to settle at 1044.38.

CommSec chief economist Craig James said poor lead-in from the US would likely see early falls on the Australian markets.

"We haven't got a positive lead-in that is for sure. The US market was down, the oil price was little changed, base metal prices were down and gold was also weaker," Mr James said.

"Futures markets are pointing to a fall of about 20 points at the start of trade. It seems to be about right.".

Europe's main stock markets were mixed at the close of trade on Friday with investors focused on the Group of 20 (G20) summit.

London's FTSE 100 index of leading shares closed 0.06 per cent higher at 5082.2 points, Frankfurt's DAX fell 0.42 per cent to 5581.41, and the CAC 40 index fell 0.51 per cent to 3739.14.

The Australian share market closed moderately higher on Friday driven by gains on financial stocks.

" It is quite possible that we will see the market move down further over the coming week as it finally moves into the short term low I have been expecting," Wealth Within chief analyst Dale Gillham said.

"If I am correct we could see a short sharp move down near the end of next week and possibly very early the week after, with the market likely to fall by at least 5 per cent and as much as 10 per cent."

Following this, Mr Gillham said he believed the market was likely to rise to about 5000 points by mid to late October before falling into another low in November.

Mr James said: "I think we are moving into a period of consolidation. The US share market does seem like it is pausing for breath after very significant gains, and I think the same thing is going to happen in Australia."

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