A reasonable start to the week is expected for the Australian market but much of investors’ attention will be focused on the US Federal Reserve’s predicted interest rate move.
Australian share futures trading over the weekend pointed to a 25-point gain come Monday’s open, after the benchmark S&P/ASX200 index closed 28.5 points, or 0.48 per cent higher at 5,949.4 points on Friday.
That comes on the back of modest gains for the Dow Jones and S&P 500 on Friday local time (Saturday AEDT).
The greenback also improved against the Australian dollar, which dipped to 77.05 US cents.
AMP Capital’s chief economist Shane Oliver said this seemed to reflect the market starting to allow for the highly likely rise of US interest rates on Thursday Australia time.
The US Federal Reserve is almost certain to move the cash rate 25 basis points to 1.75 on Wednesday local time.
That’ll mean Australia’s cash rate – stuck at 1.50 since August 2016 – will be lower than its American counterpart for the first time in more than a decade.
Dr Oliver said attention will be on the Fed’s outlook for the US economy and a quarterly survey of its top officials on the number of rate hikes expected in 2018.
The last so-called ‘dot plot survey’ indicated three rate rises.
That’ll be the main focus particularly given the concern in February about rising inflation in the US and rising interest rates, Dr Oliver said.
‘Even if the Fed does go to four hikes this year, it will probably still emphasise that it’s likely to be gradual.’
In the local market, the unemployment rate isn’t expected to move when official job figures are released on Thursday.
The anticipated 10,000 extra jobs are expected to be cancelled out by a small boost to the participation rate.
The Reserve Bank on Tuesday is also due to release the minutes from its March meeting a fortnight after it left rates on hold.