Australian financial markets are expected to open on a softer note on Monday after the lacklustre performance in the US and Europe on Friday.
But analysts are hoping that the historical rally witnessed at this time of year, the so-called Santa rally, could still begin leading to the Christmas holidays.
On Wall Street the Dow was up 0.1 per cent and the S&P 500 was flat at the closing bell on Friday. The FTSE was down 0.1 per cent, while the European market fell 0.2 per cent. A 15-point drop is tipped for the ASX on Monday.
"That might be too much of a fall but we're not seeing the conditions for a significant lead-in for our markets," CommSec chief economist Craig James said. "I think everyone is preparing to sit on their hands for the next few days."
Events to watch in the days ahead will be the release of the minutes of the Reserve Bank's December board meeting, a speech by RBA governor Glenn Stevens and the outcome of a US Federal Reserve meeting.
With improved employment figures and a new budget deal under way in the US, speculation has been mounting the Fed will start reducing its $85-billion-a-month stimulus program. "That's really going to be the main event this week," Mr James said.
The Abbott government will release its first Mid-Year Economic and Fiscal Outlook on Tuesday. It is expected to reveal a "significant" increase in the deficit, according to ANZ. It could blow out to $50 billion compared with a pre-election prediction of $30.1 billion.