Shares set to fall as Wall Street's record run comes to a halt

The Australian sharemarket is tipped to start the week on a softer note if it follows Friday's overseas trends when a record run of gains in the US ended.

The Australian sharemarket is tipped to start the week on a softer note if it follows Friday's overseas trends when a record run of gains in the US ended.

Australian futures markets are pointing to a 23-point fall, with the March share price index futures contract at 5099 points, with 7215 contracts traded.

AMP Capital's head of investment strategy and chief economist, Shane Oliver, said he thought Australian stocks were vulnerable in the short term because the bull run they had been enjoying since mid-way through last year had to end.

The heavy falls last week on talk of rises in interest rates following strong jobs data was evidence, Dr Oliver said. "There have been a few occasions in the last few weeks where it looks like some sort of correction is starting up."

US markets had similarly reacted on Friday to data showing consumer sentiment had fallen by ending a 10-day run of record gains.

Dr Oliver noted that the falls in the US were only 0.2 per cent and there was still good news such as strong industrial production offsetting peoples' worries about government spending cuts of $US85 billion ($81.6 billion) in effect.

"The broad picture globally is still one of improvement. The news coming out of Japan is particularly positive including more stimulus plans that should underpin further gains ahead," he said.

The Australian dollar had climbed higher by the weekend to trade at US104.08¢, from US103.69¢ on Friday evening, reflecting positively on big investors' views about Australia, but making life tough for local businesses.

The Australian sharemarket bounced back on Friday to post its biggest one-day gain for the year following a three-day run of losses. However the benchmark S&P/ASX 200 index closed mostly flat for the week at 5123.4 points.

The Reserve Bank will release the minutes from its March board meeting on Tuesday and two top officials will give speeches, giving further insight into its plans for interest rates in the near term.

Bureau of Statistics data on lending finance due for release on Monday will show if people are borrowing more and therefore spending and investing more.

Media executives converge on Canberra on Monday to testify before committees that will determine whether the government's media reforms will be able to go before Parliament this week, or be abandoned altogether.

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