The Australian share market is set for a solid gain at the open after reports the US and China are prepared to make concessions in trade talks pushed global markets higher.
The futures market predicts the benchmark S&P/ASX 200 will climb 43 points, or 0.7 per cent, when trade resumes on Monday.
‘We’ll share in the rally (and) it’s all because of the optimism over the US-China trade talk – it looks like progress,’ CommSec chief economist Craig James told AAP on Sunday.
‘It’s a solid gain without being out of the ballpark.’
A 3.3 per cent rise in the price of oil on the back of the trade talks is also likely to push the ASX higher.
‘And OPEC has released details of its plans to wind back production, providing more reassurances to the market,’ Mr James said.
The Australian mining sector is also likely to be bolstered by higher base metal prices, however, the price of gold has fallen by $9.70 per ounce.
‘Most in the mining sector will move forward but gold will be the softer area of the overall market,’ Mr James said.
In the week ahead, the focus will be on Chinese GDP figures and economic activity data.
‘It’s all coming out on Monday … and that will certainly drive our share market over the second half of the day,’ Mr James said.
‘The first half will be off the US-China trade talks and the positive news coming out on them.’
China’s top trade negotiator, Vice Premier Liu He, will head to Washington on January 30 for two days of trade talks with his US counterpart Robert Lighthizer.
Boosting optimism that a deal could be reached, the Wall Street Journal reported on Thursday that top US officials had discussed lifting all tariffs on China at the meeting, while Bloomberg News reported on Friday that China had offered to boost US imports by $US1 trillion.
Meanwhile, higher than expected US production figures for December has resulted in a slight fall by the Australian dollar against the US dollar since Friday.
Locally, there’s no data that will affect the ASX this week and a public holiday in the US on Monday, coupled with the government shutdown, looks set to result in less economic reports being available from the world’s biggest economy.
‘That’s something that will constrain activity over this week, the fact we’ll be running short of information to run off,’ Mr James said.