Australian market uncertain

Press, 16 November 1981, Page 24

Australian market uncertain

The Australian sharemarket's recovery from its lowest point in 16 months in the last week of October was gradually eroded during last week’s trading. The six-day rally, which boosted the market measure, the all ordinaries index, by 35 points at the start of the ■month faltered on Monday, and the market fluctuated as uncertainty became the key factor in. trading. The index finished the week nearly seven points down at 570.3 and the market was beginning to drift. The investment climate brightened as major banks acted on a United States Federal Reserve initiative on the discount rate, and prime and broker loan rates were cut. Wall Street responded with enthusiasm but a menacing cloud oversha-. dowed the welcome news as an increasing number of economic indicators pointed to a sharp slowdown in the United States economy.

The twin influences of falling interest rates and mounting concern about the severity of the United States recession sapped investor confidence and led to hesitancy in the marketplace.

Metal issues bore the brunt of the selling pressure last week as the lack of general market direction combined with a drop in gold prices' and easing prices for commodities such as silver, zinc, aluminium and copper. The index of all-metal stocks

shed 21.9 points during the week to close at 416.3. Central Norseman was among the worst hit, with a fall of 100 c for the week to 680 c. CRA approached its 1981 low but was pulled up by bargain hunters arid lost only 22c to 290 c for the week. Western Mining lost 30c to 395 c for the week. It was caught by the metals slide and worries about development of the huge Roxby Downs copper/uranium/gold deposit in South Australia’s far north, after state opposition politicians threatened to block and indenture agreement because they opposed the start-up of full-scale uranium mining in the state. Most major industrial

stocks held their ground during the week, but market observers argue that the low turnover reveals the underlying weakness of the market. Institutional and overseas investors are content with the occasional foray into the market but they have not returned with any commitment of support in the short-term. Banks, insurance and finance houses will be watched closely on Tuesday when the Campbell Committee report on Australia’s financial system is released. It was scheduled to be tabled in Parliament last Thursday, but the Federal Government postponed its public airing.