The stock market in Australia like the other exchanges in the world has taken a heavy beating in the last couple of years. Of course this is not news, because with the recession and the fall in demand and subsequently lower industrial productions, the businesses have not being doing well and naturally their stock prices have plummeted. Investors too have lost a large chunk of money on the exchange. But what is news is this – the Australian stock market is bouncing back. Though these may be early days yet, but the signs are there for all to see.

The Government Has Intervened At The Right Time And The Results Are Showing

The Aussie Government has also intervened to boost up the economy and this of course has a spiraling positive effect on the stock market. The tax rates and the interest rates have been lowered already. The lowering of interest rate definitely means that the borrowing capital for business gets cheaper and this naturally reduces the cost of production as well. The lowering of tax rate on the other hand means that the outstanding for Aussie businesses also go down.

These two decisions combined works in favor of business by making them more competitive. With the recession, many people have lost their jobs and this means that the purchasing power has gone down tremendously. And with industry becoming more competitive, the margins have also fallen. Now these measures sure enough provide a breathing space for industry and makes business more viable.

Thus it is expected that industry should report better figures in the coming months because of all these measures, and based on this expectation, the Australian stock market is also taking a positive view of things.

The mood in the stock market and among the investors is as much a factor in deciding which way the market will go. So as the mood improves, investor confidence will also return, which again will mean that the prices of stocks in the ASX will begin to climb.

It is also expected that these steps taken by the government will strengthen the Australian dollar, which again is good news for business because it will enhance profitability.

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