I remain cautious to call this the bottom, as market volumes have not yet suggested to me that the rallies of late are a sign of the commencement of a sustained rally. Having said that, I am becoming more optimistic about the short-term direction of the market, and feel that if the market can remain stable in the next few weeks, and the factors I have mentioned above continue to improve, then we may have seen a bottom to this market. In the meantime, I will be keeping a close eye on the US presidential elections. An Obama victory might be the catalyst that the US market needs to make its final turn and start trending upwards.
Saul Eslake Chief economist, ANZ
The key question for investors is the extent to which the impact of a global recession has been factored into earnings estimates. My suspicion is that it hasn't been, fully, yet. On the other hand (sorry), investors may not be giving enough credence to the likely success of the measures taken to end the financial crisis. So we are probably in the process of forming a bottom now.
I had a look today (October 20) at the bottoms that followed the last two global bear markets as big as this one (the mid-1970s and 2000-03) and the striking feature is that on both occasions there were a number of “false dawns”, and the original bottom was revisited a number of times.
So my answer this week is that we may well have seen the bottom on October 10, although we came very close to it again last Friday, and we will probably see it a few more times again before we can be confident that the worst is over.
Craig James Chief economist, CommSec
The sharemarket is still bumping along the bottom but investors are starting to embrace the cheapest valuations in 25 years.
Roger Leaning (filling in for Michael Knox) Head of Research, ABN-Amro Morgans
We believe equity markets remain hostage to their debt market sibling, and we do not think we will see stability in equities until it has returned to debt markets. So far we view the debt market reaction as cautiously positive.
