Australian share prices are likely to consolidate gains as confidence returns to the market, dealers said on Friday. For the week ending May 8 the benchmark S&P/ASX 200 gained 172.1 points, or 4.57 percent, to close at 3,941.7.
"Overall I am expecting a fairly positive week next week, and to perhaps consolidate some of the gains that we have seen this week," CMC Markets analyst Matt Lewis told AFP. "I think confidence is creeping back into the marketplace."
Lewis said overseas investors appeared to be "dribbling" back into the market, and there was still a lot of money sitting on the sidelines. "That can only be seen as a positive moving forward," he said. "Also, risk is essentially being re-priced into the marketplace and that's why I think we've seen some strength in some of these small to mid cap stocks."
IG Markets analyst Ben Potter said signs were emerging that "big money" was returning to the Australian market, which is dominated by funds and institutional money. "With the number of bears diminishing daily, the bullish case is becoming increasingly convincing," Potter said. "Australian superannuation funds are sitting on the highest cash levels in 15 years ... in the midst of possibly one of the most powerful rallies in recent years." Shane Oliver, chief economist with AMP Capital Investors, said there was still "plenty of cash on the sidelines" and a further improvement in economic data was likely.
"There will still be aftershocks from the financial crisis, and these combined with uncertainty about the pace of the recovery will ensure that the ride going forward is unlikely to be smooth," said Oliver.
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