Constructive US fiscal talks set to buoy shares
THE Australian sharemarket is set to open higher on Monday morning after gains on Wall Street on Friday and some positive comments by US political leaders about tackling the "fiscal cliff" and deficit.
THE Australian sharemarket is set to open higher on Monday morning after gains on Wall Street on Friday and some positive comments by US political leaders about tackling the "fiscal cliff" and deficit.The AMP Capital chief economist, Shane Oliver, said US stocks seemed to get a boost from talks on Friday between the US President, Barack Obama, and Democrat and Republican party leaders regarding the so-called fiscal cliff.The cliff refers to tax increases and spending cuts that will automatically come into force on January 1 unless legislation is changed.The Dow Jones closed up 0.37 per cent at 12,588.30, the broader S&P 500 was 0.48 per cent better at 1359.88 and the tech-heavy Nasdaq index improved 0.57 per cent to 2853.13.Futures markets are tipping the Australian market will open as much as 0.3 per cent higher, while the Australian dollar was last trading steady at US103.45?.Global markets have been dominated in recent weeks by talk about the fiscal cliff, which is expected to send the world's largest economy back into recession if political opponents can't reach a compromise."The key person there, the Republican House of Representatives leader, John Boehner, described talks as constructive, providing a bit of confidence that there will be some sort of solution to the fiscal cliff," Dr Oliver said."It will probably remain another nervous week, waiting for more news regarding the so-called fiscal cliff in US ... I think it's more of the same."With the Thanksgiving holiday in the US later in the week, trade was expected to be thin, and a resolution on the cliff was not expected until next month, Dr Oliver said.The outbreak of violence in the Middle East is also making markets nervous, with oil prices rising on Friday on concerns about supply.The sharemarket closed lower on Friday, with the S&P/ASX 200 index down 12.4 points, or down 0.28 per cent, at 4336.8. This took the loss to 2.8 per cent for the week.On Tuesday, the Reserve Bank of Australia will release the minutes of its last board meeting, which are expected to reveal a mild easing bias.The Reserve Bank governor, Glenn Stevens, will deliver a speech on the same day.