The gains of 2 weeks ago were wiped on the first three days of trade last week.
Although the market tried to rally late in the week, it still closed down.
The biggest surprise of the week was Cardno with earnings down the company’s share price fell 30% on the back of the announcement. Although it regained some ground on Friday closing at $2.80, it still lost 20% for the week.
The Government infrastructure spends is yet to materialize. And is not expected until 2017. This is a clear indication that we can continue to expect a weak economy and high unemployment for at least 2-years.
What does this mean for our market?
Unemployment means that the retail sector will lack growth that we already see with Woolworths as they continue to post massive losses with the Masters store rollouts.
Interest rates will remain low, which again will affect spending as most of the low-interest rates savings is currently going towards paying down debt.
For investors it is time to start to focus on the growth companies in the material and energy sector.
If underweight in this sector it is time to start accumulating.