The Australia sharemarket will likely have a weak start, with a 25-point drop predicted, following better than expected US employment figures, which has boosted expectations the Federal Reserve will move on interest rates.
The Dow Jones on Friday recovered from earlier losses to close up 47 points, or 0.3 per cent, while the S&P 500 ended flat and the US dollar was pushed higher on expectations of an interest rate increase in December, AMP Capital chief economist Shane Oliver told AAP on Sunday.
"It pushed commodity prices down," he said.
"That's obviously acting as a drag on our market."
The oil price fell 1.5 per cent, copper was down 0.5 per cent and gold was going for $US1,086.8 an ounce, a decrease of 1.6 per cent following a significant fall of 4.8 per cent during the week.
All this was pointing to a hit of about 25 points for commodity stocks, Dr Oliver said.
The ASX 200 finished the session at 5,215, up 0.4 per cent, but the futures index, which was down 38 points, or 0.5 per cent, was indicating that will be unwound.
"It looks to me like it will be the mining stocks which might take the brunt of some of that," Dr Oliver said.
The Aussie dollar had a bad week and dropped 1.3 per cent to 70.48 US cents, but could bounce back depending on what the data due out in the coming week shows.
Chinese trade figures will be out on Sunday while locally, NAB's business confidence is to be released on Tuesday and Westpac's consumer confidence survey on Wednesday.
"They will be looked at quite closely," Dr Oliver said.
The focus this week, however, will be on the release on Wednesday of Australia's October employment figures.
Dr Oliver predicts a slight gain of about 10,000 jobs with the unemployment rate to hover around 6.2 per cent after some job losses in the previous months.
Housing finance figures for September are due on Tuesday and expected to show little change.
"What we're seeing in Australia at the moment is a reduction in the number of loans going to investors, which is exactly what APRA and the Reserve Bank have been hoping for," Dr Oliver told AAP.
"But we've seen increases in the number of loans going to owner occupiers."
Chinese inflation is predicted to remain low when the figures are released on Tuesday, while the country's industrial production, retail sales and investment data are all due on Wednesday.
"They'll be looked at for how the Chinese economy is behaving (and) will probably show that the growth in China's stabilised a bit," Dr Oliver said.
He's predicting Chinese annual growth to stabilise just below seven per cent, which would be good news for Australia.
If those figures continue to slide, it will add downward pressure to commodity prices, Dr Oliver added.
Overall, Dr Oliver is expecting volatility in the market in the week ahead.
Share
