Australia’s share market is expected to open strong and rebound after dipping on Friday in anticipation of a fall in the US market.
AMP Capital chief economist Shane Oliver said the Australian market fell about one per cent on Friday in anticipation the US market would fall as tensions increased between the US and China.
But, the US market instead rose slightly with futures trading in Australia rebounding.
“Our market had fallen in anticipation but the US market actually rose,” he told AAP on Sunday.
“It’s going to open pretty strongly tomorrow …. reversing what happened on Friday.”
The S&P/ASX200 benchmark index is expected to be up 60 or 70 points on Monday after finishing on Friday down 53.4 points at 5,497 points.
Australian construction data for the March quarter is expected on Wednesday and business investment data is due to be released on Thursday.
Dr Oliver expects debate to continue around the JobKeeper error after the government on Friday admitted the subsidy scheme will now be $70 billion rather than $130 billion and will now only cover 3.5 million people rather than 6.5 million that had been forecast.
“On one hand it might suggest the economy is not as weak as treasury had assumed,” he said.
“It also suggests there’s scope to relax JobKeeper and make it available to more people or extend it.”
The focus internationally will this week continue to be news around COVID-19, vaccines, and ongoing tensions between China and the US which could impact markets throughout the week.
Data on consumer confidence in the US will be looked at closely and any April data coming from the US is expected to be weak given the month was “ground zero” of the coronavirus shutdown, Dr Oliver added.
The Australian dollar has risen slightly and is buying 65.3 US cents after dipping on Friday to 65.15 US cents.
Dr Oliver forecasts the Aussie dollar will continue to gradually rise as economies re-open.
“Providing major economies continue to re-open the Aussie dollar will probably drift higher,” he said.
“Tensions around trade with China and the US-China relationship may cause bits of volatility with the Aussie dollar but the major picture is one of recovery.”