The Australian sharemarket is tipped to open flat after outperforming the United States over the last week and economists are now watching the Reserve Bank of Australia for an interest rate cut “sooner than later”.
The futures contract, one of the best indicators for predicting how the market will open, fell two points or less than 0.1 per cent at last close after what AMP Capital’s chief economist Shane Oliver called a “pretty good week”.
“We rose about 1.8 per cent outperforming the US through the week,” he told AAP on Sunday.
A decline in the oil price on Friday night will likely drag down Australia’s gas producers and energy stocks, Dr Oliver said.
A drop in the iron ore price will also be a bit of a handbrake on Monday.
Economists will be watching out for credit data from the RBA on Tuesday which is expected to show modest growth constrained by housing.
CoreLogic will release house price data for the month of April on Thursday, Dr Oliver said, and that’s predicted to reveal a 0.5 per cent drop in prices through the month.
The Australian Bureau of Statistics is tipped to released building approval data on Friday.
“There was a bounce in February for apartment approvals but they’re quite volatile, so we’re expecting a sharp pullback,” Dr Oliver said.
He’s expecting a 12 per cent drop from February.
New data from the US, including on inflation, payroll and jobs, and business surveys on manufacturing and the broader economy will likely reveal a solid market.
China, too, is expected to release similar indexes that affirm their positive growth.
The Australian dollar rose a little on Friday to 70.25c US but it’s still down over the course of the week.
The RBA, Dr Oliver said, is expected to cut interest rates as soon as next week.
“Quite a few economists are moving to forecast that cut after inflation figures came in on the low side for Australia last Wednesday,” he said.
“If they don’t cut then they’ll cut in June. Some say they may wait until after the election but there’s a strong case to cut sooner rather than later.”
Dr Oliver said the Federal election has yielded few surprises so far with policy announcements failing to heavily impact the market.