The market in the week ahead

The market in the week ahead
The Australian market is expected to open stronger on Monday with global stocks hitting record highs on Friday, capping their best week in over two months.

The stock market rally was on the back of the US dollar falling to nine-month lows, investors betting on a gradual U.S. Federal Reserve rate hike path and hopes for a strong earnings season in the US.

The market was also boosted by oil prices edging higher to a weekly gain of 5.2 per cent, suggesting investors think OPEC might be managing the oil glut.

The Australian dollar’s surge would also be helping.

The ASX futures are pointing to the Australian stock market opening 0.2 per cent higher on Monday morning.

For investors, a lot of focus will be on the minutes of the Reserve Bank of Board meeting from earlier this month where the RBA decided to keep interest rates at the record low of 1.5 per cent.

With the Bank of Canada last week tightening for the first time in 7 years, raising its overnight rate 25 basis points to 0.75 per cent and further rate hikes by the BoC looking inevitable, the question is whether the Bank of Canada’s action might signal which way the RBA is heading.

The ANZ team of economists does not believe the shift by the Bank of Canada will provide any signal about the RBA’s stance and the minutes will reflect that.

Also of interest to investors will be speeches by Alex Heath, Head of Economics at the RBA’s Analysis Department on Wednesday, by deputy governor Guy Debelle and assistant governor Michelle Bullock, both on Friday.

The key piece of data this week will be the labour force figures from the Australian Bureau of Statistics on Thursday. With 140,000 jobs created in the three months to May, there will be a lot of focus on the June figures and whether the momentum will continue.

The market’s expectation is for a jobs gain of 20,000 in the month, keeping the unemployment rate steady at 5.5 per cent.

 

 



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