The correction we had to have?

The Australian share market experienced its worst week in three years as investors exited their positions, primarily the big four banks, following the release of mixed economic data. The S&P/ASX All Ordinaries Accumulation Index closed down 4.7% for the week with the four major banks all 15-20% off their April highs. Signs are now pointing towards a technical correction, or a 10% drop in the market, from the Index’s peak at 5955 on 27 April. The Australian share market is now 8% off its late April highs. On Tuesday the Reserve Bank of Australia decided to keep the cash rate steady at 2%. Stronger than expected GDP figures and weaker retail sales numbers have divided the market as to whether the loosening cycle has finished. The key catalyst we are watching will be the next set of inflation data due in July.