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The Australian share market is set to start the trading week lower, following Friday’s heavy losses on Wall Street but experts are hopeful a ‘Santa Claus rally’ will push it back up going into Christmas.

Ongoing worries about the global economy have so far kept markets flat in December thanks to the US-China trade war and dour economic data from China.

On Friday, the Dow Jones Industrial Average fell almost 500 points, or two per cent, the S&P 500 index lost 1.9 per cent and the tech-heavy NASDAQ fell 2.6 per cent.

AMP Capital’s chief economist Shane Oliver says while the Australian market will open in the red on Monday, it may not experience the full extent of the drop felt in the US.

‘That’s possibly because we had an over one per cent fall on Friday, so to some degree we’ve already anticipated the fall on Wall Street,’ he told AAP on Sunday.

The futures market predicts that the benchmark S&P/ASX 200 will fall 0.6 per cent, or 30 points, lower when Australian trade resumes.

Despite the markets’ disappointing start to December, Dr Oliver says there’s hope the third week of December will bring with it the traditional ‘Santa Claus rally’.

‘People tend to feel happier going into Christmas and the end of the year, a lot of companies aren’t raising capital anymore,’ he said.

‘The last two weeks of December are usually fairly solid on share markets … it will be interesting to see whether that so-called Santa rally gets through.’

In other local news, the federal treasurer is expected to release the mid-year economic and fiscal outlook early this week.

Dr Oliver says he is expecting the figures to show a substantial improvement in budget projections.

Even factoring in upcoming election spending he says the figures indicate the government will have some scope to provide fiscal stimulus spending increases or tax cuts before Australians head to the polls.

The Reserve Bank of Australia will also release minutes from its board’s monetary policy meeting for December on Tuesday.

The Australian dollar lost momentum on the economic data from China and was buying 71.93 US cents on Friday.