THE Australian sharemarket is expected to open higher on Monday, after positive offshore leads and futures trading.
US stocks rallied on Friday, with the Dow closing above 14,000 points for the first time since October 2007 after a positive US jobs report.
In comparison, Australia's S&P/ASX 200 Index is only trading at about 20-month highs.
The Dow Jones Industrial Average closed at 14009.79 points, up 149.21 (or 1.08 per cent). The broad-based S&P 500 finished at 1513.17 points, up 15.06 (1.01 per cent), while the tech-heavy Nasdaq jumped 36.97 points (1.18 per cent) to 3179.10.
The Dow broke through 14,000 points after a US jobs report showed net jobs grew at an average 181,000 a month in 2012, well above forecasts of 153,000. German and British stocks also posted strong gains on Friday, rising about 1 per cent.
On Sunday, the ASX 24 March share price index futures contract was pointing to a 24-point gain on Monday, to 4903 points.
CommSec chief economist Craig James said while he also expected gains to start the week in Australia, he believed they would be more modest than futures trading was indicating.
The strong offshore gains on Friday were related to profit-taking that had occurred the previous day to mark the end of January, which had already happened in Australia, he said.
"I think it will be higher, certainly all the positive factors are there, but perhaps the expectation in terms of the futures market may be a little bit on the firm side," he said. "We have reporting season starting up, the interest rate decision and investors have got to have a degree of caution going into the week."
The optimism that has seen a bull run in shares in recent weeks will be tested by the start of the Australian earnings season.
On Tuesday, Challenger Diversified Fund is expected to report, with Cochlear, Transurban, Reckon and Navitas also listed.
On the economic front, the monthly inflation gauge, building approvals and job advertisements will be released. CommSec expects a modest lift in building.
The RBA is not expected to move rates on Tuesday, amid signs the global economy is improving.
Last Friday, the Australian market returned to its two-week bull run as investors, buoyed by a positive US earnings season, turned to high-yielding stocks. The market is up nearly 6 per cent for the year.
On Friday, the S&P/ASX 200 closed up 42.3 points, or 0.87 per cent, at 4921.1, and the broader All Ordinaries closed up 40.9 points, or 0.83 per cent, at 4941.9.