Australian shares look likely get off to a good start on Monday on the back of gains in overseas markets and a positive economic data.
The Australian share market closed flat for the week on Friday after seven days of gains followed by two days of sell-offs left it up less than one point higher than where it had begun last Monday.
But CommSec chief economist Craig James says there’s enough positive data around for it to gain 32 points or half of a per cent at the start on Monday.
“The expectation is that we should get off to a good start,” Mr James told AAP on Sunday.
“Stranger things have happened of course, but there is enough positive news out there that should be able to drag our markets forward.”
On Friday, the benchmark S&P/ASX200 index closed down 51.5 points, or 0.83 per cent, at 6,181.3 points while the broader All Ordinaries was down 49.8 points, or 0.79 per cent, at 6,270.6.
Since then there have been gains in the US and European markets.
US employment data was also possibly a little higher than expectations and wage growth is contained – so there is no reason for the Federal Reserve to raise interest rates, Mr James says.
Gains in the oil price should help Australia’s energy sector on Monday and while iron ore was down a trifle it had good recent gains.
“Where we may see a little bit of softness is among the base metals producers,” Mr James said, suggesting a possible fall of around half a per cent in line with prices.
“Certainly the markets remain in fairly good shape and the hope now is that we get some resolution of the US china trade negotiations.”
He said it was very encouraging that talks continue next week – via video link – and that there are a positive reports about that say progress is continuing to be made.
In the meantime, it is watch and see, for both the US negotiations and the Brexit “machinations”, he said.
The Australian dollar hasn’t changed much and most currencies are held in tight ranges.
The AUD is a little weaker against the US dollar but still within the range it has been for a while of US70-71 cents.
The upcoming week will be fairly quiet for economic data in Australia with some consumer confidence reports, several Reserve Bank of Australia speakers and the RBA’s financial stability review by the end of the week.
“But the major thing that investors around the world are watching is for some announcement on the US China negotiations,” Mr James said.
“It continues to be a watch and wait thing.”