(Australian Associated Press)
Prime Minister Tony Abbott says the global economy is not a “one-way escalator” and Australians can face the future with confidence.
Mr Abbott told reporters in far north Queensland on Wednesday that continuing instability in world stock markets was a correction after “overexuberance in the Chinese market earlier in the year.
“Australians have every reason to face the future with confidence not withstanding the headwinds overseas,” Mr Abbott said.
The federal government and the opposition agree on one thing: the Chinese economy is still going strong.
Treasurer Joe Hockey insists the fundamentals in the world’s second largest economy are improving, with signs of a pick-up in the property market and an interest rate cut by the Chinese central bank overnight.
Opposition treasury spokesman Chris Bowen has told the ABC China is still experiencing solid growth.
The Australian share market has opened one per cent lower on Wednesday.
At 1010 AEST on Wednesday, the benchmark S&P/ASX200 index was down 51.4 points, or 1.00 per cent, at 5,085.9, while the broader All Ordinaries index was down 49.4 points, or 0.96 per cent, at 5,094.4.
On the ASX 24, the September share price index futures contract was down 69 points at 5,058, with 25,730 contracts traded.
Mr Hockey later cautioned that volatility would continue in global markets following a sixth straight day of losses in the US, but investors must take heed of the fundamentals of economies.
“There will be volatility in the markets,” he said on Wednesday on the sidelines of a summit in Sydney on economic reform.
“There are extraordinary capital flows around the world at the moment, in part linked to speculation about the US Federal Reserve increasing rates,” he said.
Mr Hockey will join other G20 finance ministers in Turkey next week.
“Frankly, you’ve got to see through the volatility and look at the fundamentals and the fundamentals are Australian companies are profitable, they’re well run and Australia is in a very good position for the future,” Mr Hockey said.
While there were gains in most major markets overnight following the move by the Chinese central bank to slash interest rates, Shanghai lost more than seven per cent and Tokyo almost 4 per cent, and US also closed lower after having earlier traded up nearly 3.0 per cent.
The S&P 500 ended down 1.35 per cent, after Monday’s nearly 4.0 per cent plunge. The Dow gave up 1.29 per cent.