It was no doubt a coincidence, but no sooner had Treasurer Joe Hockey finished a round of media appearances to try and soothe the jangled nerves of investors – faced with the possibility of another steep share sell-off on Tuesday – the ASX rallied.
The market recovered from an initial 1.5 per cent sell-off to finish nearly three per cent higher on the day, clawing back some of Monday’s $60 billion losses, and despite another hefty tumble on the Chinese market.
Mr Hockey hit the airwaves early, after US and European shares tanked as investors continued to fear that a Chinese economic slowdown could have a ripple effect across the globe.
But the treasurer is confident the world is not on the cusp of a crisis, describing the sell-off as a correction while talking up the globe’s positive fundamentals.
Potentially higher interest rates in the US are a sign that that economy is improving, while Europe and Japan are growing.
“People are speculating that (China) won’t grow at seven per cent – now that’s ridiculous,” the treasurer told 3AW radio.
“If it grows at 6.5 per cent or six per cent, anywhere in that range, indicates the Chinese economy is still growing quite strongly.”
Prime Minister Tony Abbott also weighed in, urging Australians not to “hyperventilate” over the slump on global sharemarkets.
He did not expect any ramifications for Australia after receiving a briefing from Reserve Bank governor Glenn Stevens and senior officials while touring Torres Strait islands.
Opposition Leader Bill Shorten agreed with the treasurer that the economies of both Australia and China are strong.
“But I think we have a weak government,” he told reporters in Brisbane. “Everything they touch in the last two years, be it captain’s picks right through to economic policies, has turned bad.”
Andrew Aylward, a director at consultants Pitcher Partners Investment Advisory Services, warned that the rise of automated trading means that once volatility spikes, markets will react violently.
“As such, we would expect the markets to bounce around over the rest of the week,” he told AAP.
How consumer confidence behaves in coming weeks in reaction to these swings will be a pointer to future spending in Australia.
New figures showed consumer confidence eased 0.2 per cent last week, although the ANZ-Roy Morgan gauge did not capture Monday’s share rout.