Market set to follow US down

AMERICAN markets are pointing the way to a poor Monday opening, despite a rise in trading on Australia markets on Friday.

US markets were caught in a sell-off on Friday, with the S&P 500 falling 0.4 per cent to 4677.03, after earlier falls on Thursday.

The Nasdaq Composite index was also down on Friday, with investors slicing off 0.96 per cent to 15080.86.

This comes as the state of the Australian economy is revealed this week with a spate of critical data.

AMP Capital chief economist Shane Oliver said American investors sold off on Friday night after disappointing jobs numbers and uncertainty about surging cases of Covid-19.

The US has reported record-breaking Covid-19 infections, with deaths now on a climb to their winter peak. On Sunday the US reported 689,000 new infections.

Talk of further US rate rises, with some analysts tipping four in the face of higher inflation expectations, has sent jitters through markets.

“I suspect the focus will remain on the US interest rate expectations and inflation numbers due out on Wednesday CPI for December,” Dr Oliver said.

“We seem to be heading towards four rate rises.”

US industrials, which traded up much of Friday, closed the day down just 0.01 per cent to 36,231.66.

Dr Oliver said markets were faced with questions about economic activity in the face of the Omicron wave.

“People self-regulate to avoid getting Omicron and in many cases have to stay at home in isolation, which affects the economy,” he said.

Building approvals, retail trade, jobs vacancies, and lending indicator data from the Australian Bureau of Statistics are all due in the coming week.

The Melbourne Institute will also release its Inflation Gauge report on Monday.