Australia’s share market is likely to be subdued when it opens on Monday following a spike in coronavirus cases in the US and concerns of a second wave in Victoria, a leading economist warns.
The US market was “volatile’ on Friday with the Dow Jones closing 208 points down (0.8 per cent) after climbing 371 points up earlier in the day, says CommSec senior economist Ryan Felsman.
Adding to the uncertainty in the market was Apple closing 11 stores in the US after Florida and Arizona recorded increases in COVID-19 cases.
“Trading on Friday was initially quite strong on the back of discussions between the Chinese and US around trade and that optimism was eroded when the case numbers came out,” Mr Felsman said.
“Apple announced the closing of US stores, so that negative sentiment has probably filtered through to the Australian market and we have more cases in Victoria…and that will have an impact on sentiment too.
“That will knock confidence and unfortunately set the Aussie market up for a weaker start.”
He said the US market also wavered on the back of the quarterly expiration of Equity and Futures options.
However, Australian shares are likely to be more impacted if a second COVID-19 wave eventuates and how the state and the federal governments respond fiscally.
“How they respond to a second wave if it occurs is what the Australian market will react to,” Mr Felsman said.
“That depends on how governments respond health-wise and fiscally.”
Victorian Premier Daniel Andrews has been forced to reimpose restrictions within his state after 25 new coronavirus cases were recorded on Saturday and a further 19 on Sunday.
The state has had five consecutive days of double-digit growth.
Also potentially having a bearing on the ASX will be the appearance of Reserve Bank of Australia Governor Philip Lowe at Leadership Forum on Global Economy and COVID-19 at the ANU on Monday.
“I’m not sure if they will be marketing moving but they will be closely monitored,” he said.
The Australian dollar fell during trading on Friday from a high of US69.10 cents to close at US68.3 cents at the close.