Australian shares look set for a fairly good start to the week after European leaders reached agreements in an attempt to solve the continent’s migration crisis.
The agreements at a European Union summit, along with mostly solid economic data out of the United States, helped drive modest gains on Wall Street on Friday and pretty good gains in Europe, AMP Capital’s chief economist Shane Oliver says.
It comes after the benchmark S&P/ASX200 plunged in the last half-hour of trade on Friday to close down 20.8 points, or 0.33 per cent, at 6,194.6 points.
The broader All Ordinaries index lost 16.1 points, or 0.26 per cent, at 6,289.7 points.
‘It looks like we’ll have a pretty good gain at the open for our share market tomorrow, I suspect a gain of about 20 to 25 points … that’s roughly about .4 per cent,’ Dr Oliver told AAP on Sunday.
‘So it’s sort of reversing, we had a 21-point decline on Friday during the day in our time, but it looks like that decline will be fully reversed at the open on Monday.’
Energy stocks should also help drive strength in the market because of higher oil prices in the US and globally.
Dr Oliver said the Australian dollar was around 74 US cents, up from its lows on Friday but still down from where it was a week ago.
He expects it will remain fairly soft this week because of the Reserve Bank’s interest rate decision on Tuesday, which is likely to leave interest rates on hold.
‘The focus is going to be on the statement in terms of what they say about the economy, but I suspect they’ll leave the impression the rates will stay on hold for a while yet,’ Dr Oliver said.
He said CoreLogic figures on Monday are likely to show further weakness in house prices, while Australian Bureau of Statistics data on Tuesday might show a bounce in building approvals.
Retail trade figures from the ABS on Wednesday will probably only show modest growth in retail sales.
US jobs figures on Friday will likely reveal continued strength in the country’s labour market and low unemployment, while the ISM Manufacturing Index on Monday will probably show its economy remains very strong.
Dr Oliver said trade would likely remain a focus in the week ahead, with the US threatening to impose tariffs on China from July 6.