The Australian stockmarket is expected to have a more stable week this week, after international volatility last week caused the Australian dollar to plunge to an 18-month low.
After falling to US72.85C/ last week, a level not seen since the beginning of 2017, the Australian dollar had rallied by the weekend back above US73C/.
Commsec economist Craig James said the expectation was that the share market would follow the dollar’s rise.
‘The expectation is for a rise of 28 points, and I wouldn’t disagree with that,’ Mr James said.
There’s also more hope surrounding the NAFTA trade negotiations between the United States, Canada and Mexico, as well as trade meetings between the US and China.
‘A weaker currency tends to be good for our sharemarket because it attracts foreign investors in, but there’s enough in terms of positive fundamentals as well, especially these trade negotiations underway,’ he said.
It follows the benchmark S&P/ASX200 index on Friday finishing the week up 10.9 points or 0.17 per cent on 6,339.2, while the All Ordinaries index also finished up 13.6 points or 0.21 per cent to be on 6,426.2
‘One market which is a good indicator for our market is the Canadian sharemarket with its mix of financial and mining type stocks and it was up by six-tenths of one per cent,’ Mr James said.
It’s the middle of reporting season, with major companies including Woolworths and BHP due to give results, along with three major media players – Seven West Media, Nine Entertainment and Southern Cross Media.
Ms James said very few companies have taken the opportunity to give guidance about what their results will be, which has been causing share price fluctuations.
‘I suppose that’s the price being paid by companies who don’t believe it’s warranted to update the market about their position,’ he said.
However he stressed overall the news had been positive from most of the majors’ reports, with strong dividend payments leading to share price recovery.
‘Even if they have disappointing earnings results they’re coming out with maintaining or increasing dividends,’ he said.
‘Dividends are up in aggregate by around 10 per cent which shows companies are making money, and they’re confident about making money in the future.’
The Reserve Bank board minutes will be released this week, but they’re not expected to have any great revelations, after the RBA elected to leave the interest rate on hold at 1.5 per cent earlier this month.