No rosy picture from Caton

This year is going to be tougher for investors than 1999, according to one leading economist.

BT Fund Management’s chief economist Dr Chris Caton told delegates at an AMP Financial Planning conference yesterday that, despite the bull run of the Australian stockmarket last year, this would slow down in 2000.

This year is going to be tougher for investors than 1999, according to one leading economist.

BT Fund Management’s chief economist Dr Chris Caton told delegates at an AMP Financial Planning conference yesterday that, despite the bull run of the Australian stockmarket last year, this would slow down in 2000.

“There are people speculating about a world economic boom this year, but I don’t think it’s going to happen,” he said.

Caton called the US stockmarket “overvalued” and said the US was “growing too quickly” to sustain itself in the coming year.

“There will be a correction, but not a crash, in the US stockmarket. This will still leave the Dow (Jones Index) at 10,000 points,” he said.

Despite the negative effect any falls in US markets would have on Australia, BT Funds Management remained moderately bullish on the Australian sharemarket. Caton predicts a fall in the All Ordinaries to 2950 by the end of June, rising to cur-rent levels of around 3150 by the end of this year.

He also predicted Australian interest rates would rise at least twice this year, by three quarters of a per cent (or seventy five basis points) by the end of February, with a possible rise of a further 25 basis points in April.

“A year ago, people were speculating on how low rates would go. Now they’re speculating on how high. Take it from me — interest rates still have higher to go.”