shares are set to plunge 50 points tomorrow.., page-2

A tiny 50 points? Even 100 points still leaves the ASX 200 index above what most people thought, about a month ago.

Might be higher or lower, it is anyone's guess, but it will be just another day on the roller coaster ride. Again, there is likely to be significant sector differences.


Wall Street sets scene for fall
By Richard Webb
January 22, 2006

Shares are set to plunge 50 points tomorrow after higher oil prices and disappointing corporate news sent Wall Street reeling on Friday night, experts say.

The local market is tipped for a big fall in all sectors except energy, where oil giants Woodside and Oil Search are likely to move higher after oil surged above $US68 a barrel in New York.

Despite the expected fall, AMP Capital Investors head of investment strategy Shane Oliver said there was no cause for alarm.

"I don't think this is the start of a major correction," he said. "We are heading into a period of increased volatility after strong gains at the start of the year. Valuations on shares are still pretty good and the yield remains attractive."

CommSec chief equities economist Craig James agreed. He said investors should consider topping up some of their holdings tomorrow.

"We will look pretty soggy on Monday but this will represent a wonderful buying opportunity for long-term investors," he said. "As we saw last week, when the market falls it bounces straight back up, and this should be no different."

The Dow Jones shed 213 points (2 per cent) on Friday after crude oil rallied $US1.52 a barrel to $US68.35 on concerns about supplies from Iran and Nigeria.

US corporate giants General Electric and Citigroup also delivered disappointing quarterly profits. Google dropped 8 per cent after the US Justice Department sued it to hand over information on web searches. The S&P500 index lost 1.8 per cent, while a sharp fall in Google left the Nasdaq 2.4 per cent lower.

Dr Oliver said concerns over oil from Iran were likely to continue and he expected the price would test its record of about $US70 a barrel.

The US profit reporting season was also not living up to expectations, he said. "We are heading into the biggest week . . . with 100 of the S&P500 stocks due to deliver their earnings, and so far these profits have been a bit mixed," he said. "Last week's sharemarket volatility is a sign of what we can look forward to over the next few weeks."

Mr James said the US market had been "priced to perfection". And while most companies that had reported were reasonably solid, some had not met the high expectations. "Oil is heading up towards the record set last August and that means motorists are staring down the barrel of petrol at $1.30 to $1.35 a litre," he said.