The near-collapse of Bear Stearns highlights ongoing problems in the US credit market, which could have implications for Australia, according to AMP Capital Investors head of investment strategy and chief economist Shane Oliver.
As reported this morning in SHAW Stockbroking’s egoli Overnight MarketWatch, Wall Street closed lower on Friday on news the fifth largest investment bank in the US required emergency funding due to an ongoing liquidity crisis.
“Equities rose early in the day on the back of a mild consumer inflation report, but couldn’t hang on after this latest slap in the face,” the report stated.
The Dow fell 194.65, or 1.6 per cent to 11951.09, while the broader S&P 500 slipped 27.34, or 2.08 per cent to 1288.14. The Nasdaq declined 51.12, or 2.26 per cent to 2212.49.
According to Oliver, last week’s events could translate into extra pressure for the Australian share market as borrowing becomes even more expensive for Australian institutions.
The result of this for homebuyers is that borrowing costs would increase.
