Continued uncertainty over global growth will mean a rough start and more volatility for the Australian share market in the run-up to Christmas.
But the so-called Santa Claus rally should provide some support and the local market will likely finish on a high, AMP Capital's chief economist Shane Oliver said on Sunday.
He predicts it will open around 40 points down on Monday.
The forecast dip follows a volatile week on Wall Street in which markets rallied in response to the first US interest rate rise in nearly a decade before ending lower.
US stocks closed down for the second straight day on Friday amid concerns ranging from falling crude oil prices, anxiety over an oil glut during a demand slowdown, and the global response to the Federal Reserve's rate hike.
"It's probably going to be a fairly rough start because Wall Street had a bad day on Friday," Dr Oliver told AAP.
"This is largely in response to a return about worries in the global growth market.
"I think this week will be volatile again as the uncertainties continue."
He said fears over global growth throughout 2015 sparked by events such as China's economic slowdown and Russia's recession were buoyed by the Federal Reserve's interest hike.
But the typical peak in investment in the lead-up to Christmas should boost the Australian stock market.
"The seasonal backdrop of the so-called Santa Claus rally will provide some support, so I think overall the market will manage to do OK," Dr Oliver said.
Close attention will be paid to the results of the Spanish general election and its possible impact on European markets in an otherwise quiet and shortened trading week.
Falling world oil prices, which dropped a further one per cent on Friday, were continuing to be a drag on energy companies while consumers had yet to feel the benefit at the petrol pump, Dr Oliver said.
"This is good for consumer spending, which should at some point help retailers, but we haven't seen a lot of that yet," he said.
"This will partly offset the negatives of the energy stocks."
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