China woes, US rates to weigh on our market
THE sharemarket is expected to slide on the back of volatility in China and uncertainty about US interest rates.
AMP Capital chief economist Shane Oliver tips the local market to open 25-30 points, or about 0.6 per cent, lower today, after falls on Wall Street and in Europe last week.
Dr Oliver says patchy US job figures on Friday fuelled speculation about whether the US Federal Reserve will raise interest rates later this month.
He doesn’t expect any “motherhood statements” from this weekend’s G20 meetings in Turkey to arrest trader anxiety about the strength of Chinese economic growth either.
“The bottom line is these concerns about China and the Fed are lingering — that’s what’s causing this volatility in the local market,” Dr Oliver said. “Both these issues are being kept alive. There’s no resolution.”
While US markets will be closed today because of the Labour Day long weekend, the patchy Chinese market will open. Local investors will also be keeping an eye on trade and inflation figures coming out of China tomorrow and Thursday respectively.
Dr Oliver tips Australian unemployment figures on Thursday to be flat, consistent with GDP growth, and local business and consumer confidence surveys to reflect market concerns about China and US rates.
At the close on Friday, the benchmark S&P/ASX200 index was 12.8 points, or 0.25 per cent, higher at 5040.6, while the broader All Ordinaries index was up 12.1, or 0.24 per cent, at 5060.8.
Dr Oliver expects the Australian dollar, which was trading at US69.05 overnight, down from US69.83 on Friday, will tumble towards the 60 mark — and possibly lower.
That’s bad news for online buyers and holiday-makers, but manufacturers, farmers, miners and higher education providers would be happy, he said. “It’s hard to see it (the Aussie) falling … further in the space of a week,” he said. “I wouldn’t bet against it though.”