Money
Issue No. 23 - June/Nuly 2005
Spending slowdown jitters market
by Mr Tim Binks
The Australian equity market has at last wobbled somewhat and is struggling to maintain the positive momentum of last year.
An important catalyst for investor nervousness has been a string of profit downgrades in the consumer discretionary sector. The combination of an interest rate rise in March and a late start to winter weather has seen many discretionary retailers (particularly apparel retailing) reduce their profit expectations for the current half year. The tax cuts announced in the May budget provided some short-lived relief to those stocks’ share prices. However, the risk remains that the Reserve Bank will respond with another rate rise should consumer spending and housing prices rebound quickly.
As is often the case the banks have benefited from a more conservative and defensive approach amongst investors and in general, larger cap companies are preferred to smaller ones in the current environment.
South Australian companies have largely managed to k...
