Rough Times

Shares made new lows in the past week on more bank failures & uncertainty about the US relief package.

The AMP's Dr Shane Oliver says that successful approval and implementation of the US debt relief package should head off a worst case economic slump, but won't stop recession in the short term.

That means the ride for shares is likely to remain rough in the short term, but they are good value on a one year view.

He says the turmoil and recessionary conditions in the developed world highlight the need for much lower interest rates globally including in Australia and Asia.

The credit crunch and global share markets have taken another turn for the worst this week reflecting a combination of continuing bank failures/rescues in the US and Europe and the US House of Representatives initial rejection of the US Government's debt relief package.

Uncertainty regarding the investment outlook is continuing to drive massive daily swings in share markets.

Over the last twenty trading days the Australian share market has seen 17 days where the market has moved by 1% or more, with US, European and Japanese shares seeing an average of 14 days.

This is way above historical norms.