Australian investors are expected to take a relaxed approach to the escalating trade tensions between the US and China when the market opens on Monday.
The Dow Jones and broader S&P 500 both lost more than 2.1 per cent on Friday after US President Donald Trump threatened $100 billion in additional tariffs.
But while the S&P/ASX 200 is also expected to dip from its Friday close of 5788.70, the losses are forecast to be softer.
AMP Capital’s chief economist Shane Oliver said the market looked set to shed about 30 to 35 points, or half a per cent, as local investors reflect the US losses.
But he noted most of the tensions between the world’s two biggest economies had been caused by tariffs that are yet to be implemented.
‘Being a bit more distant means we’ve been able to take a more relaxed approach because it doesn’t directly affect us,’ Dr Oliver said.
‘Australian investors are inclined to think ‘well, it’s all a bit worrying but we’re yet to see it implemented’.
‘It’s a phoney trade war in a way.’
The Australian dollar is forecast to slide further after closing last week half a per cent down at 76.72 US cents.
Investors will be listening out for whether Reserve Bank Governor Philip Lowe voices any concerns about the trade rift when he addresses a business event in Perth on Wednesday.
The RBA is also set to release its half-yearly assessment of the current condition of the financial system and potential risks to financial stability.
Dr Oliver said comments about the Sydney housing market coming off the boil and earlier worries about poor lending standard will probably be of most focus.
Housing will be on minds throughout the week with reports on finance, construction and prices expected to be released.
The market expects a modest decline in housing finance when the ABS releases its February data on home loan approvals on Thursday.
Corelogic’s weekly report on house prices in the capital cities is due on Monday while Ai Group’s construction performance index on Tuesday is expected to show growth backed by home building.
Internationally, inflation figures from China and the US are expected while the Chinese are also due to release their trade figures.