Australian market set to open higher
Australian stocks are tipped to start the week higher after gains on US and European markets, while the dollar will likely soften as it settles into a downward trend.
AMP chief economist Shane Oliver says the Australian share market looks set to open a moderate five to 10 points higher on Monday.
This follows a one per cent gain on the Dow Jones industrial average on the back of a strong Nike earnings report and a rally in Apple shares.
But the Australian market looks set to stay under some pressure on Monday morning, with nervousness in the iron ore sector and continued weakness in the Australian dollar, he says.
"Those factors are a constraint on our market," Dr Oliver said.
"Typically when the Australian dollar is coming down it has the effect of keeping foreign investors on the sidelines, so they tend to stay away even though a fall in the Aussie dollar is good from a long-term perspective.
"So it looks like we'll have a reasonable start to trade tomorrow. But it will only be modest."
The Australian dollar touched yet another seven-month low on Friday, hitting 87.5 US cents, ahead of the release of US economic growth figures.
The local currency ended trade at 87.66 US cents, down from 88.05 cents on Thursday.
US stocks finished an up-and-down week on a high note, posting solid gains on the Nike earnings report and a rally in Apple shares.
The Dow Jones Industrial Average on Friday stood at 17,110.84, up 165.04 points (0.97 per cent).
The broad-based S&P 500 gained 16.66 (0.85 per cent) to 1,982.65, while the tech-rich Nasdaq Composite Index surged 45.45 (1.02 per cent) to 4,512.19.
It will be a busy week for domestic and international economic data, Dr Oliver says.
On Tuesday, the Reserve Bank of Australia is expected to release its credit data for August, while the Australian Bureau of Statistics is expected to release its retail trade data for the same month.
"The market is going to look at how strong the housing investment credit figures are, given the concerns the RBA (Reserve Bank of Australia) is expressing on that front," Dr Oliver said.
On Friday the US is expected to release its monthly employment data for September.
Analysts tip a monthly rise of 210,000.
"The August figures were surprisingly soft. They only showed 142,000 jobs," Dr Oliver said.
"In the US that's going to be the main focus ... and the interest around that is in what the federal reserve will do - the timing of when they'll raise interest rates."
However, Dr Oliver said he did not expect the employment data to bring forward a Federal Reserve interest rate hike, currently expected in the June quarter of 2015.
On Friday, the benchmark S&P/ASX200 index was down 68.8 points, or 1.28 per cent, at 5,313.4 points, while the broader All Ordinaries index was down 65.8 points, or 1.22 per cent, to 5,316.6 points.
