Local trade steady with renewed faith in China
A resilient start to the week is likely for the Australian sharemarket in the face of continuing weakness on Wall Street.
The US market endured one of its worst weeks this year with the Dow Jones industrial average falling 344.04 points, or 2.23 per cent, to 15,081.47.
But CommSec chief economist Craig James said the slight negative reflected in the local futures market might not be a reliable indicator.
"The futures are suggesting a seven-point fall at the open on Monday ... but there have been gains in metals and oils over the weekend and European markets ended last week higher," he said. "So we may do better than that."
He suggested that the Canadian market, which ended the week higher, could be a better guide to local activity early in the week.
He also pointed to a slight rally in the Australian dollar late last week as another positive for local trading.
At the same time, Mr James said, a lack of economic data, with the exception of BHP Billiton reporting its full-year results on Tuesday and the release of the RBA minutes of its monthly board meeting the same day, would likely keep the Australian market within a tighter range over the coming five days.
The Australian market dropped by 0.7 per cent on Friday following profit taking among investors in major banks and resource companies.
But Mr James believed it would continue to hold firm above 5000 points as renewed confidence in China emerged.
"I think people are revising their expectations on China," he said.
"They were becoming much too negative."
He pointed to last week's comments from ANZ boss Mike Smith, who suggested concerns about China were "overdone".
"We need to remember that the world's second-largest economy is still growing at around 7 per cent to 7.5 per cent per annum, and this is like adding an economy the size of Switzerland each year," Mr Smith said at the announcement of ANZ's results.