Aus Market v US

Does anyone out there have a good theory as to why the Aussie markets are getting hit twice as badly as the US on down days and only half as well on the good days?
This has been a recurring theme for several months now.
I know there is a big interest rate differential, but markets are supposed to be forward looking aren't they?
I think there is a good chance of some rate cuts here next year, whereas in the US, once this sup prime business finally subsides, rates will have to start going up again.

 

Hi Lorrimer,

I think we will have to wait to see inflation well below 3% to see rate cuts, most of the resets for sub-prime will have occurred by November this year.

This means we are still in for a bumpy 8 months!

For 2009, it's too far to make any guesses.

Cheers,

Dan

 

Nowhere near yet

I will agree with the theory that our market had a better run than the US and it needs to fall further.
How much does the market have to fall?

It's difficult to say but there is a market link between our ASX and the DOW
and if you look at the DOW chart it still has some way to go before it gets to where it should be (IMHO somewhere between 9,000 and 10,000 pts).

We are going through a major correction phase similar to the one we saw between 2000-2002 so we should expect a similar time span of approx. 30 months.
Considering that the problems started 6 months ago we should have another 2 years to go.

However, the US economy is in trouble, and I wouldn't be surprised if this situation lasts for much longer than people think and the share markets could fall further as a result.

IMHO

 

Jobs decline sends Wall Street lower | smh.com.au

Another possible price fall next Monday of almost 100 points would indicate next week could be another interesting week.........

 

Apples and oranges. Eleven of the companies that make up the ASX20 are financials, with a weighting of something like 40-50%. Considering what is pulling our markets down at the moment, you can expect our index to perform worse.

 

but resource and engineering companies are down as well

 

That's an interesting point. And as they say " the market can't go up without the financials".
So first the financials have to put in a bottom before, we can start recovering.