Even though the Australian stock market has been underperforming offshore markets and under pressure this week, the team at Commsec are still bullish on local stocks.
In a research note yesterday they characterised recent weakness as a “consolidation” and have quite an optimistic outlook for the next 12 months.
The drivers of this are expected to be a pick-up in the Australian economy over the next 12 months on the back of:
- the Australian election being over
- low interest rates in the Australian economy,
- a recovering Chinese economy
- a still fragile US economy which will slow the withdrawal of stimulus by the Fed.
We expect the sharemarket to continue to lift in coming months on the assumption that the global economy continues to heal and on the expectation that the Australian economy exhibits stronger momentum. CommSec remains comfortable with current forecasts for the All Ordinaries & ASX 200 indexes. Conservatively we maintain our end year forecast of 5,400 points and our forecast of 5,600 points by June 2014. Total returns on shares are tipped to lift around 20 per cent in 2013/14 after 20.7 per cent growth in 2012/13.
The ASX 200 closed yesterday at 5307.7, down 45.2 on the back of what Commsec is saying – this weakness should prove transitory.