Has the stockmarket bottomed? Unfortunately for investors there is no official indicator that rings loud and clear when the worst is over. But there is the Eureka Report Market Bottom Assessor (MBA) … and it’s just twitched!
Every week for the last month 10 market experts have made a “call” as to whether they thought the market had bottomed — today for the first time since it started, the MBA is positive with the largest number of experts declaring we’re back on an upward trajectory on the ASX.
What happened? Yesterday’s 0.25% cut in official interest rates to 7% finally pushed CommSec economist, Craig James, over the line into positive territory. James says the combination of the rate cut, lower oil prices, and an annual results season which brought no unforeseen debacles prompted his improved outlook.
James now joins fellow “bulls” Michael Knox of ABN Amro, Ed Prendergast of Pengana Capital, Allan Furlong of stockbrokers Joseph Palmer and fixed interest specialist Steve Wright.
The stockmarket reached a peak of 6,800 in November last year and plunged as low as 4,800 in July. Over the last month it has hovered around the 5,000 mark with some evidence of a “breakthrough” in recent days as it climbed comfortably above 5,100 reaching 5114 this morning.
Though we now have bulls as the dominant group in our MBA some well known commentators continue to remain cautious — Chris Caton chief economist at BT Financial and Lucinda Chan of Macquarie Private Wealth are sitting on the fence while Saul Eslake, chief economist at ANZ says:” I still think there is more downside than upside risk from the global economy, and I doubt that we will see a swift upturn in the Australian on the back of this week’s rate cut.”
Is it really the bottom? In the harrowing investments markets of the mid 1970s the market appeared to recover seven times only to continually test new lows. However, this time round there is reasonable inflation and employment levels further bolstered by the still dynamic growth of China.
This is an edited version of a story that will appear later today at www.eurekareport.com.au
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