The Australian share market is tipped to correct itself and open higher after faltering at the close in anticipation of a Wall Street dip that never eventuated.
Threats of US imposed tariffs on China spooked the Australian market to close 32 points lower on Friday.
However, Wall Street weathered the uncertainty, which should mean a bump in the local market at the open, according to AMP Capital’s chief economist Shane Oliver.
‘We’ll have a bit of a bounce to make up for that,’ Dr Oliver told AAP on Sunday.
‘It looks like we’ll recover a big chunk of the losses we saw on Friday.’
Dr Oliver said the futures index was pointing to a 25 point climb on Monday
Positive economic data helped steady the US market amid the political uncertainty borne out of President Donald Trump’s ongoing trade threats, Dr Oliver said.
‘It’s just weathering it, it’s sort of something that causes nervousness in the markets when the headlines hit, but then the market goes back to focus on the fact that underlying economic conditions are pretty strong,’ he said.
A new free trade deal with Indonesia, struck over the weekend by new Prime Minister Scott Morrison and President Joko Widodo, is good news according to Dr Oliver, but unlikely to influence much on the ASX.
‘It’s all very positive, but probably not enough to move the market at this point in time,’ he said.
Meanwhile, the Reserve Bank is expected to keep interest rates on hold at a meeting on Tuesday, despite toying with the idea of a rise for several months.
‘I don’t even think it’s going to come next year, I think it’s a 2020 story,’ Dr Oliver said of when Australians could expect to see a rate rise from the RBA.
Dr Oliver said the market would take leads from a host of economic data due to be released through the week, including GDP figures.
He anticipates economic growth will be 0.7 of a per cent in the June quarter, ‘which is sort of OK growth, but probably not quite as strong as the Reserve Bank would like it to be’.
Official retail sales figures, to be released on Monday, and Friday’s Australian Bureau of Statistics housing finance data, are both expected to be soft, Dr Oliver said.
‘People don’t feel so happy to dip into their wallets when their house (value) is declining,’ he said.