Australian markets ended in negative territory for the eighth successive session yesterday, their longest losing streak in seven years.
The All Ords and S&P 200 indices both dived 2.5 per cent, following weakness in global markets on Monday night.
The Westpac-Melbourne Institute Australian consumer confidence index, released yesterday, fell 8.3 per cent in January to 103.1 points from 112.5 in December.
"January's consumer confidence appears to have been hammered by the rate increases at retail banks and the sour equity market," Icap senior economist Matthew Johnson said.
Since the December survey, the share market has fallen well over 10 per cent and is around 17 per cent off its May 2007 high.
Johnson said, in relation to the present tightening cycle, the Reserve Bank of Australia (RBA) had never lifted rates when consumer confidence had been so low.
"The lowest confidence has been when the RBA decided to tighten was 105.2 points for October 2006, which the RBA had at their November 2006 meeting," he said.
"Historically, they more typically cut rates when consumer confidence is below 105 points."
He said a low consumer confidence number was not enough to stop a massive CPI number from pushing the RBA into action.
"It's for this reason that I think the RBA will need a plus 0.9 per cent quarter-on-quarter result for core CPI to get them lifting rates, whereas historically they need only plus 0.8 per cent."
