Bourse Set To Reach New High

The Age

Sunday April 28, 1996

Stephen Cauchi

The Australian stockmarket should set a new high this week barring a fall in Wall Street or commodity prices, according to stockbrokers.

The All Ordinaries closed 9.7 points higher on Friday to finish at 2326, only 14.6 points from the record set in February 1994.

``If (overseas markets) remain stable, the gold price continues to move upwards and commodity prices take a bit of an upward tick there's no reason why the market shouldn't push through those all-time high levels," said Jamie Spiteri, of Shaw Stockbroking.

Trading opens today on the back of Friday night's 1.1-point rise in the Dow Jones to 5568. Although Wall Street improved slightly last week, American investors are uncertain as to the strength of the US economy.

Several crucial US economic reports will be released this week, including economic growth figures and the latest employment data.

US bond dealers are waiting to see if the reports will signal a change in US interest rates.

Benchmark 30-year US Treasury paper was unchanged on Friday night.

Despite the uncertainty in the US bond and share markets, which are a major influence on domestic markets, local investors remain optimistic. The June Futures Share Price Index, which acts as a forecast to the All Ordinaries position at the end of the quarter, is at 2358 - a 32-point premium to the physical market.

The optimism has been fuelled by last week's subdued inflation and wages data, which sparked hopes of a cut in interest rates and increased earnings expectations for companies.

Mr Robert Hyden, of ANZ McCaughan, also pointed to the takeover activity in the small-to-medium stocks as a contributing factor.

However, several brokers questioned the market's long-term future. Mr Lee Iafrate, of D&D Tolhurst, predicted that poor financial-year results could dampen the market's bullishness.

WHAT THE BROKERS SAID.

There's still a bit of uncertainty about the wages environment . . . my personal view is that we're not going to have a big rally from here on in. We might get there (to the record) and come back a bit.

-- David Perry, of Austock Brokers.

Provided we don't get a fallback on Wall Street . . . we'll probably see it break the record in the next couple of days.

How far it'll go and whether it'll hold - well, that's another question. But there's underlying confidence and bullishness, that's reflected in the futures index.

-- Jeremy Morrison, of William Noall.

I don't think I'd be worried too much about breaking the record, I'd be looking at whether we'll be 2400 by June. Underlying all of this is the fact that Australian earnings for June '96 are going to be absolutely shocking.

-- Lee Iafrate, of D&D Tolhurst.