AMP chief economist Dr Shane Oliver said that while the past week has been dominated by Brexit worries, which have pushed down most share markets, in the long term it is expected that shares will continue to trend higher this year.
Dr Oliver said this will be helped by relatively attractive valuations, ultra-easy global monetary conditions and continuing moderate global economic growth.
Brexit concerns over the past week have seen US shares drop 1.2 per cent, Eurozone shares lose 2.4 per cent, Japanese shares, which were also hit by the absence of monetary easing, fall six per cent, Chinese shares lose 1.7 per cent and Australian shares fall 3.7 per cent.
"The Brexit vote is fast approaching and nervousness in financial markets has been building over the last few weeks, particularly as the leave campaign – focusing on the more emotive topic of immigration – has been showing a lead over remain," he said.
The eight per cent fall in Eurozone shares, he said, is likely overdone, however.
While shares may fall a little further if the leave campaign wins, "Europe is likely to hang together as it did through its sovereign debt crisis", he said.
Although the polls have been in favour of the leave campaign, he still predicts a vote to remain.
In terms of bonds, Dr Oliver said lower bond yields point to a soft medium-term potential from them, but it is difficult to have a bearish outlook in a world of fragile growth.
"That said, the recent bond rally has taken bond yields to ridiculously low levels, leaving them at risk of a sharp snapback," Dr Oliver.
Capital city dwelling price gains are expected to slow to around three per cent over the year ahead, as the heat comes out of Sydney and Melbourne thanks to toughening lending standards and pockets of oversupply, he said.
"Prices are likely to continue to fall in Perth and Darwin, but price growth may be picking up in Brisbane."
Commercial property and infrastructure, on the other hand, are likely to continue benefiting from the ongoing search for yield by investors.