Record gains overseas and a strong futures index are pointing to a good start for the Australian markets in the week ahead.
The futures market is indicating a gain of 31 points or half a per cent when Australian trading opens this week – a prediction CommSec chief economist Craig James believes is reasonable.
‘We have got a tremendous lead-in from overseas with record-breaking efforts from the United States with the Dow Jones up over 228 points,’ he told AAP on Sunday.
‘That does augur well for our market.’
However, he suggests iron ore prices that dipped on Friday could hold back Australian stocks. He noted the rest of the base metals were a mixed bag.
Oil and gold prices went up – the latter by nearly $10 – which should strengthen the energy sector and gold stocks.
In good news for consumer-focused companies and importers, but less so for exporters, the Australian dollar rose back above US79c.
The US public holiday for Martin Luther King Jr Day could also lead to restraint in Australia’s markets.
‘We’ll be working on Monday …. but we won’t get too much guidance then from the American markets for our Tuesday session,’ Mr James said.
Several top-shelf financial indicators out this week – including December jobs figures, the ANZ-Roy Morgan consumer confidence, and November’s housing and lending finance numbers – are likely to steer both the Australian dollar and markets.
They’ll also factor into interest rate expectations for the Reserve Bank’s first meeting of 2018 in February.
There is some Chinese economic data due for release this week and the US earnings season got underway on Friday, with strong results from banks JP Morgan, BlackRock and Wells Fargo.