Calmer start tipped for local market
The ASX ended the week at a five-week low after hitting 5-year highs a little over a week ago.
US markets closed flat on Friday while European stocks were down. In futures trading in Australia, the ASX 24 is pointing to a fairly flat open on Monday of six points lower.
CommSec chief economist Craig James described the events of late last week as good old-fashioned and healthy profit-taking after a strong run in bank and industrial stocks.
"I think a lot of investors, particularly fund managers with thoughts turning to June 30, are thinking now is the time to take some profits if there is a flatter time or period of weakness ahead," he said.
He believes much of the economic news that drew negative reactions on markets last week represents positive news longer term.
That includes the US Federal Reserve pondering pulling back on stimulus for the economy, indicating a recovery, the Australian dollar falling and even the Chinese slowdown, because authorities can stimulate it.
Fund managers might take cash out of the market short term to reassess investment strategies, following rises in sharemarkets around the world of late, Mr James said, but it was not a big concern.
Frequently Asked Questions about this Article…
The article says two days of volatile trading and widespread profit-taking after a strong run in bank and industrial stocks drove the drop. Global cues — flat US markets and weaker European stocks — also fed local volatility, contributing to about $60 billion being removed from market value.
Yes. Futures trading (ASX 24) was pointing to a fairly flat open — about six points lower — and the market was tipped to start in a calmer mood after the two volatile sessions.
The article notes US markets closed flat while European stocks were down, which helped temper local sentiment. Those offshore moves, combined with local profit-taking, influenced expectations for a quieter Australian open.
Craig James described the late-week falls as 'good old-fashioned and healthy profit-taking' after banks and industrials had run strongly. He also suggested fund managers may be locking in gains ahead of June 30, rather than signaling a major market problem.
According to the article, Craig James views the Fed considering a pullback in stimulus as a sign of recovery and therefore a positive for the longer term. The piece frames that news — along with a falling Australian dollar and a manageable Chinese slowdown — as ultimately constructive for markets.
The article says fund managers might temporarily take cash out to reassess strategies after recent market gains, but it characterises this as short-term repositioning rather than a major concern for markets overall.
The article presents this as part of normal market swings: a quick reset after a strong rally. That pullback reflected profit-taking rather than new, underlying problems, according to the commentary cited.
Based on the article's commentary, a practical takeaway is to recognise the recent moves as short-term profit-taking amid a broader recovery narrative. Investors might use quieter moments to reassess strategy, keep a longer-term perspective, and avoid overreacting to short-term volatility.
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