Australian shares head south but CommSec economist Craig James tips bounce back in 2023

The ASX 200 tumbled again on Monday and CommSec’s chief economist expects it to fall up to 9 per cent this year. But he is tipping some good news for 2023.

The ASX 200 fell 0.64 per cent to close at 6433.4 points on Monday. Picture NCA Newswire/ Gaye Gerard.

Australian shares remained stuck on a downward trajectory Monday, continuing a rout that started last week as nervous investors remained fearful of a recession.

The ASX suffered its seventh consecutive day of losses, mirroring similar falls in key overseas markets recently as worries grow that interest rate hikes intended to snuff out inflation will send economies into a tailspin.

The benchmark ASX200 fluctuated steadily throughout the day but ended up shedding 41.4 points, or 0.64 per cent, to close at 6433.4 points.

The broader All Ordinaries index fell 0.81 percent to end the day at 6609.5 in a continuation of the worst downturn since the start of the pandemic two years ago.

Among the biggest losers were mining, energy and materials stocks, which gave up more than 5 per cent.

Fortescue Metals Group shed 8.6 per cent to close at $17, BHP lost 5.3 per cent to finish at $40.26 and Rio Tinto fell 5 per cent to end at $101.59.

Santos gave up more than 6 per cent to close out the day at $7.32, while Woodside was down 4.8 per cent to finish at $30.37.

The worst performers included Paladin Energy, down 13 per cent, and Champion Iron, which lost 12 per cent.

CommSec Chief Economist Craig James.

By contrast, among the best performers were Pointsbet, which added 18 per cent, and Appen, which gained 9.6 per cent. Most of the big banks also chalked up small gains.

More than $250bn has now been wiped out in share value this month, with the ASX 200 and All Ords both down by about 12 per cent over the course of the financial year.

“Share markets have fallen sharply in recent weeks continuing the plunge that started early this year due to worries about inflation, monetary tightening, recession and geopolitical issues including the invasion of Ukraine,’’ AMP chief economist Shane Oliver said Monday.

“It’s still too early to say markets have bottomed. This will weigh on superannuation returns for this financial year.

“As always, the most speculative ‘assets’ are getting hit the hardest including the pandemic winners of tech stocks (with Nasdaq having fallen 34 per cent ) and crypto currencies (with Bitcoin down 70 per cent from its high last year).’’

Based on the stellar performance of the market last year, CommSec chief economist Craig James had forecast 5 per cent growth in the share market this year.

“But even these relatively downbeat views have proved too optimistic,’’ he said Monday. “Faced with soaring inflation, central banks have adopted more aggressive policies to wind back the Covid period stimulus.”

Although Mr James expects the market to fall between 7 and 9 per cent this year, he’s tipping better days ahead over the next 18 months. He’s now expecting a 7 to 9 per cent lift in the next financial year and 5 to 8 per cent growth over the 2023 calendar year.

“Australian companies are well cashed up with profits at record highs,’’ he said.

“Overall the Australian economy is well placed to deal with the challenges that lie ahead. In calendar year 2021 the economy grew by 4.8 per cent – the fastest growth in 23 years. And more recently over the year to March 2022 the economy expanded by 3.3 per cent, still well above the ‘normal’ rate of growth closer to 2.3 per cent.

“Commonwealth Bank Group economists expect the economy to grow by 3.7 per cent in the current 2021-22 financial year. Over the next year, economic growth will slow to more sustainable levels as interest rates rise.’’

Originally published as Australian shares head south but CommSec economist Craig James tips bounce back in 2023