China data to lift weak sentiment
The Australian market is expected to have a particularly soft open on Monday after Wall Street shares ended lower for the second week straight.
At the end of the US holiday-shortened week, the S&P 500 was down 1.1 per cent at 1630.74. The Dow Jones Industrial Average lost 1.2 per cent at 15,115.57, and the tech-heavy Nasdaq Composite ended a fraction lower at 3455.91.
On the ASX 24, the June share price index futures contract is indicating the market will open 57 points, or 1.16 per cent, lower. But data released at the weekend showed manufacturing activity in China unexpectedly rebounded in May.
AMP Capital chief economist Shane Oliver said the Chinese data should lift local mining stocks and offset some of the effects of the negative lead from Wall Street.
Locally, it will be a busy week for economic data, with the focus on the Reserve Bank's decision on interest rates and the Bureau of Statistics' national accounts.
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The Australian market is expected to open lower this week, with a particularly soft open on Monday. ASX 24 June futures were indicating the market would open about 57 points, or roughly 1.16% lower.
Wall Street shares finished lower for the second straight week, with the S&P 500 down 1.1% at 1630.74, the Dow Jones Industrial Average down 1.2% at 15,115.57, and the Nasdaq Composite slightly lower at 3,455.91. That negative lead from US markets is helping push expectations of a weaker open in Australia.
Over the weekend China released manufacturing data showing activity unexpectedly rebounded in May. That stronger-than-expected Chinese manufacturing data is expected to help soften the downward pressure on Australian markets.
AMP Capital chief economist Shane Oliver said the rebound in Chinese manufacturing should lift local mining stocks. Stronger Chinese industrial activity typically supports demand expectations for commodities, which can be positive for mining shares.
ASX 24 futures are signalling a weaker open—about 57 points or 1.16% lower—reflecting negative international leads from Wall Street, although improved Chinese manufacturing data may offset some of that weakness.
Locally, it will be a busy week for economic data. Investors should watch the Reserve Bank of Australia’s decision on interest rates and the Bureau of Statistics’ national accounts, both of which are highlighted as key focuses in the week ahead.
Mixed signals—Wall Street weakness pushing markets down and stronger-than-expected Chinese manufacturing boosting commodity-linked sectors—mean the overall market may open softer but some sectors, particularly mining, could see support. Keep an eye on sector performance rather than just the headline index.
The Reserve Bank’s interest rate decision is a top local focus this week. After international moves from the US and the new Chinese data, the RBA decision and national accounts are likely to be key domestic drivers of market direction and investor sentiment.
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