Encouraging data a positive lead for local market

THE Australian sharemarket is expected to open higher on Monday, after overseas markets lifted on Friday.

By InvestSMART · 26 Nov 2012

By InvestSMART ·
26 Nov 2012

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THE Australian sharemarket is expected to open higher on Monday, after overseas markets lifted on Friday.

In a holiday-shortened session on Wall Street on Friday, stocks rallied on signs that the holiday shopping season was off to a good start. The Dow Jones Industrial Average rose by 172.79 points, or 1.35 per cent, to 13,009.7 points.

The broad-market S&P 500 index added 1.3 per cent, to 1409.15 points, and the Nasdaq Composite index lifted 1.38 per cent to 2966.85.

AMP Capital head of investment strategy Shane Oliver said markets in the US and Europe made solid gains on Friday after unexpected rises in German and French business confidence and post-Thanksgiving optimism in the US.

"ASX 200 futures rose 30 points, or 0.7 per cent, pointing to a solid start to trading for the Australian sharemarket when it opens on Monday," he said.

On the economic front in Australia, data on new home sales and private capital spending are released this week. In the US, talks on resolving the so-called fiscal cliff are expected to intensify.

In the euro zone, Dr Oliver said the focus was likely to be on Sunday's regional election in Catalonia, Spain. He said if secessionists did well, confidence in Spain might suffer.

Also, European finance ministers meet on Tuesday and are expected to reach an accord regarding financing a debt reduction package for Greece. In China, the release on Friday of the Purchasing Managers' Index, an indicator of business conditions, is expected to confirm that economic growth in China has bottomed.

On the company front this week, Harvey Norman and Brickworks hold annual meetings on Tuesday. Cabcharge and Oroton have AGMs on Wednesday BHP Billiton, Lend Lease, Macquarie Radio Network and Ramsay Health Care hold annual meetings on Thursday Primary Health Care meets on Friday. AAP

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Frequently Asked Questions about this Article…

Why is the Australian sharemarket expected to open higher this week?

Overseas markets lifted on Friday—US stocks rallied and European business confidence surprised to the upside—leading AMP Capital’s Shane Oliver to note gains in the US and Europe. ASX 200 futures rose about 30 points (0.7%), which the article says points to a solid start for the Australian sharemarket when it opens.

What does a 30-point rise in ASX 200 futures mean for investors?

A 30-point rise in ASX 200 futures typically signals that the market is priced to open higher; the article reports that this 0.7% futures gain points to a solid start to trading for the Australian sharemarket on Monday.

Which Australian economic data releases should everyday investors watch this week?

The article highlights two key domestic releases to watch: new home sales and private capital spending. These data points can give investors insight into housing demand and business investment trends in Australia.

How might US 'fiscal cliff' talks affect markets and Australian investors?

The article says talks to resolve the US ‘fiscal cliff’ are expected to intensify this week. Progress—or lack of progress—on those negotiations can influence global risk sentiment and volatility, which in turn can affect Australian share prices.

Are there European events this week that could influence Australian markets?

Yes. The article notes a regional election in Catalonia, Spain, where strong secessionist results could hurt confidence in Spain. Also, European finance ministers are due to meet about financing a debt-reduction package for Greece—both events could affect market sentiment.

What is the significance of the upcoming China PMI release for investors?

The article says China’s Purchasing Managers’ Index (PMI) is expected to confirm that economic growth in China has bottomed. A stabilising or improving PMI can boost global growth sentiment and support cyclical sectors and commodity prices.

Which companies mentioned in the article have annual meetings or AGMs this week?

The article lists company meetings for the week: Harvey Norman and Brickworks hold annual meetings on Tuesday; Cabcharge and Oroton have AGMs on Wednesday; BHP Billiton, Lend Lease, Macquarie Radio Network and Ramsay Health Care hold annual meetings on Thursday; and Primary Health Care meets on Friday.

Why did US stock indices rally in the holiday-shortened session, and what were the moves?

US stocks rallied on signs that the holiday shopping season was off to a good start. The article reports the Dow Jones Industrial Average rose 172.79 points (1.35%) to 13,009.7, the S&P 500 added about 1.3% to 1,409.15, and the Nasdaq Composite lifted about 1.38% to 2,966.85.