US, Europe set up soft opening but Santa rally hopes remain
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.
Frequently Asked Questions about this Article…
Australian financial markets are expected to open on a softer note on Monday following a lacklustre performance in the US and Europe on Friday.
A Santa rally refers to a historical trend where stock markets often see a rise leading up to the Christmas holidays. Analysts are hopeful that this rally could still occur this year.
On Wall Street, the Dow was up 0.1% and the S&P 500 was flat at the closing bell on Friday. The FTSE was down 0.1%, while the European market fell 0.2%.
A 15-point drop is tipped for the ASX on Monday, although some believe this might be too much of a fall.
Investors should watch for the release of the minutes from 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 in the US, there is speculation that the Federal Reserve will start reducing its $85-billion-a-month stimulus program.
The Abbott government is expected to reveal a 'significant' increase in the deficit, potentially blowing out to $50 billion compared to a pre-election prediction of $30.1 billion.
The main event this week is expected to be the US Federal Reserve meeting, where decisions about the stimulus program could be made.
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