US jobs report, Italian election, boost Aussie market

ITALY’S new government and good economic data in the US have boosted the Australian market which is expected to open strong today.

The benchmark S&P/ ASX200 was down 0.4 per cent, at 5990.4 on Friday, while the broader All Ordinaries index was down 0.3 per cent, at 6104. Wall Street rallied on Friday night after Italy’s new government was formed, avoiding an early election, and a US jobs report revealed the unemployment rate was the lowest since 1969 while wages were up slightly.

“It looks like a good start to the week because Wall Street had a nice rally,” AMP Capital chief economist Shane Oliver said. “Another goldilocks jobs report showed the economic data was not too hot, not too cold ... there’s good growth but not a lot of inflation pressure.”

In the US, the S&P 500 gained 1.1 per cent while the Dow Jones Industrial Average finished at 0.9 per cent.

Domestically it will be a busy week with the Reserve Bank meeting tomorrow to decide on interest rates.

Dr Oliver predicts the bank will keep rates on hold, and doesn’t see a rate hike until 2020 at the earliest.

This would be the 22nd month in a row where interest rates remain at 1.5 per cent.

The GDP will be released on Wednesday which Dr Oliver says will likely show the Australian economy had reasonable growth in the March quarter.

The markets shouldn’t be impacted by the upcoming summit between Donald Trump and Kim Jong-un.

“As long as it’s on, markets are reasonably happy,” he said. “Markets will only react if it looks like it will be cancelled again.”

The threat of a trade war still remains a sensitive point as United States Secretary of Commerce Wilbur Ross prepares to engage in another round of trade talks with China this week.