The Australian market is expected to open higher on Monday after stocks soared on Wall Street with the release of strong job figures.
The local share price ended a week of gains slightly lower due to market jitters ahead of unemployment figures out of the US.
The S&P/ASX200 index fell 0.58 per cent on Friday to finish at 6062.9 points while the broader All Ordinaries was down 0.51 per cent.
AMP Capital chief economist Shane Oliver says a rally on Wall Street Friday after a ‘Goldilocks’ jobs report will give the share market a good start.
‘Not too hot, not too cold but just right: unemployment was a very low 3.9 per cent while wages growth is still slow at 2.7 per cent but expected to start rising later this year,’ Dr Oliver told AAP on Sunday.
The Dow Jones leapt 332 points to close 1.4 per cent higher, with the S&P 500 increasing 1.3 per cent and Nasdaq jumping 1.7 per cent.
Australian futures followed, up 38 points or 0.06 per cent with a 35 to 40 point increase expected in the coming week, he said.
The strong US jobs figures rallied the Greenback and caused global currencies to soften with the Australian dollar falling to around 75.29 US cents.
Australians can also expect to pay more for petrol as oil hit its highest price in three years.
Housing figures released on Friday showed a decline due to uncertainty in consumer spending, falling house prices in Sydney and Melbourne and national underemployment at 8.5 per cent.
But bank shares are steady despite a tightening on home mortgage lending and the furore over further revelations from the banking royal commission.
‘I suspect the market has already factored in the worst,’ Dr Oliver said.
‘With each new revelation it goes, ‘oh well, we already knew that,’ and absorbs it.’
The main focus this week is the federal budget, expected boost shares slightly after the government flagged better than expected revenue and tax cuts for lower income earners.
Dr Oliver said it was the first truly ‘positive’ budget from the Liberal National Coalition, without any surprise cuts expected.
Retail sales figures released on Monday are expected to show a small rise, he said.
And China is expected to maintain its economic growth in figures due out on Tuesday, with an eight per cent increase in exports pointing to continued demand for raw Australian materials.