He believes volatility in share prices is likely to continue for a while yet, although investors should heed the positives in key economies.
The ASX ended 0.6 per cent higher on Wednesday, recovering after initially being undermined by a late sell-off in the United States.
An interest rate cut in China appears to have had a calming influence after massive share selling there over the past few days.
“There will be volatility in the markets,” Mr Hockey said on the sidelines of a national reform summit in Sydney.
He said there were extraordinary capital flows around the world at the moment, in part linked to speculation that the US Federal Reserve would soon raise interest rates.
But beyond the volatility were fundamental strengths. “Australia is in a very good position for the future,” Mr Hockey said.
It was a message conveyed by Prime Minister Tony Abbott as he continued his week-long tour of remote indigenous communities.
“Australians have every reason to face the future with confidence not withstanding the headwinds overseas,” Mr Abbott told reporters – one of those headwinds being the correction in China’s stock market.
Mr Hockey also hit back at critics who doubt his ability to deliver promised personal income tax cuts and bring the budget back to surplus by 2020.
“If you save money where you can and certainly don’t go on massive new spending binges in a range of different areas, then you can find the money to pay for the necessary reform to strengthen the Australian economy,” he told ABC television.
There was positive news on the economy as economists gear up for next week’s June-quarter growth figures.
Construction work completed in the June quarter grew by 1.6 per cent compared to the previous three months, when economists had expected a 1.5 per cent decline.
What made up the growth was even more of a surprise with engineering jumping 5.6 per cent, after six previous quarters of construction, while residential building fell three per cent. Commonwealth Bank of Australia senior economist John Peters said it was probably too early to say that the transition from resources to non-mining investment was picking up speed.
But it would make a positive contribution to growth in the quarter and bolstered his view that there would be no more interest rate cuts this cycle.