Stocks likely to start the week on a strong note

THE Australian sharemarket is expected to open higher on Monday after US markets closed out last week at record highs, with the energy sector, in particular, tipped to fare well through the session.

ASX futures are pointing to a gain of 37 points, or 0.5 per cent, at the open, signalling most of Friday’s losses should be reversed in early trade.

Strengthening commodity prices should help boost the local market at the start of the week, CommSec chief economist Craig James said.

“The futures market hasn’t been a great indicator for our market of late but there are good reasons why the market should be higher on Monday,” he said. “We’ve had the oil price move higher: Nymex and Brent both rose 2.1 per cent (on Friday). So that’s going to be good for the energy sector.”

Oil prices finished last week at 13-month highs on hopes that the US fiscal stimulus package will lift its economy and increase demand for oil. Over the week, Brent rose 5.2 per cent to $US62.43 a barrel, while Nymex crude gained 4.6 per cent to $US59.47 a barrel.

Base metal prices were also mostly stronger, with copper close to its highest level in eight years.

The strong commodities environment is boosting the Australian dollar, Mr James said.

“That‘s why the Aussie dollar is being well supported above US77c,” he noted. In Friday’s trade, the local currency climbed from a low of US77.17c to a high near US77.65c. It was trading at US77.55c at the US close.

The Australian sharemarket finished Friday’s session down 0.6 per cent, with investors spooked about the five-day lockdown in Victoria.

The S&P/ASX 200 closed down 43.4 points, or 0.6 per cent, at 6806.7 points.