Grocery growth and building materials in the spotlight

Building and groceries will take centre stage on the domestic market today.

Wall Street was hit by a wave of mergers overnight among advertisers, retailers and biotechs that failed to fire up the market. It edged lower ahead of the release this week of crucial US GDP figures.

While Australian stocks are expected to tread water, Woolworths fourth quarter sales will be keenly watched, particularly its performance in the key food and liquor division where analysts are expecting growth of 2.3%.

The giant of the sector, growth in the retail group has lagged a resurgent Coles in recent years although on absolute basis it remains streets ahead of its Wesfarmers owned rival. The sales figures should provide direction for both stocks.

Among the miners, both BHP and Rio Tinto advanced overnight by about 0.7% which should provide some support in early trade as copper prices stabilised at a three month low.

The key official data release today will be building approvals with a solid lift of around 2.2% expected. If that is exceeded, building materials stocks such as Boral, James Hardie and Adelaide Brighton will find support.

That figure will be keenly watched by the Reserve Bank, which has wanted to talk down the value of the Australian dollar. Money markets now are pricing in a 75% chance of a rate cut next Tuesday and will be dissecting every word from RBA governor Glenn Stevens at 1305 AEST when he delivers a speech in Sydney.

Elsewhere in the region, another significant fall is expected on the Tokyo market as the yen maintained its strength against the greenback overnight and as lawmakers debate the prospect of raising consumption taxes from 5% to 8% in an effort to rein in its enormous deficit (see our latest video on Japan).

China's official manufacturing data and US employment numbers later in the week will set the direction for global markets in the month ahead.