Australian sharemarket set for flat start to week
THE Australian share market may have enjoyed its best day in two months on Friday but is expected to open flat when the trading week begins.
The benchmark S&P/ASX200 index closed Friday up 96.8 points, or 1.49 per cent, to 6587.0 points, its best day since a 102.4-point gain on June 11.
But AMP Capital chief economist Shane Oliver said the market was likely to open flat this morning after the US bourse closed flat on Friday due to depressed hopes of a USChina trade deal.
A fresh round of US tariffs on $US112 billion ($A166 billion) in Chinese goods is set to kick in on Sunday (US time).
“There was some hope (President) Donald Trump might delay the round of tariffs. When I looked this morning, there was still no sign of that,” Dr Oliver said. The futures market indicated the ASX would fall 0.1 per cent upon opening today, Dr Oliver said, and remain steady throughout the day. Later in the week, analysts’ eyes will be keenly trained on the Reserve Bank board’s meeting tomorrow, with interest rates likely to be kept at 1.0 per cent.
However, Dr Oliver said he wouldn’t be surprised by another rate cut due to persistent softness in the Australian economy.
“I suspect they’d prefer to wait until they get a handle on the impact of the most recent rate cut and the (government) tax cut,” Dr Oliver said. “Whatever way you look at it, I think they’ll cut rates again before the year ends.”
GDP figures would also be released later in the week, with soft growth of 0.4 per cent for the quarter and 1.3 per cent annually forecast. These could all negatively affect the share market, Dr Oliver said.
“We’re seeing ongoing weakness in consumer spending, housing and construction activity, falling business investment, it’s weak, but hopefully we’ll see some growth in public demand and contribution to growth from trade and net exports,” Dr Oliver said.