The Australian share market is expected to tick higher on Tuesday but any gains could be short-lived ahead of the expected release of the final recommendations of the banking royal commission.
The commission’s report is due to be handed to the federal government on Friday and publicly released soon after, although the exact timing is still to be confirmed.
The benchmark ASX200 index is tipped to rise from its close at 5905.6 points ahead of the Australia Day long weekend after Wall Street gained on Friday with the Dow Jones Industrial Average adding 0.75 per cent to 24,737.2.
The US edged higher on the back of a broad-based rally as investors were heartened by news Washington would temporarily end the longest US government shutdown in history.
President Donald Trump confirmed he and lawmakers had agreed to a three-week stop-gap spending plan to reopen the government.
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‘Australian shares are likely to do okay,’ AMP chief economist Shane Oliver said.
But local gains could be pared as Friday looms, with investors expected to be skittish ahead of an expected harsh round of recommendations out of the Royal Commission into Misconduct in the Banking, Superannuation and Financial Services Industry.
Over the past year, Commissioner Kenneth Hayne has heard explosive evidence that has embarrassed and shamed the financial sector, including big names like AMP and Commonwealth Bank of Australia.
His report is expected to contain recommendations that will have a recognisable impact on the banking and financial sector, including lending practices.
Also on the local agenda this week are inflation numbers for the December quarter due on Wednesday.
Financial markets are expecting relatively weak headline and underlying inflation outcomes of about 0.5 per cent for the quarter and 1.8 per cent over the calendar year 2018.
Overall, the numbers are likely to reflect falls in petrol prices and health costs.
Globally, all eyes will be on the monthly two-day US Federal Reserve meeting on monetary starting Tuesday and US-China trade talks in Washington mid-week and the release of a backlog of economic data held up by the 35-day government shutdown.
While the Fed meeting is expected to end with no change to US interest rate policy, analysts will be scanning the commentary for cues about the state of the economy and the prospect of an end to the current tightening cycle.