Aust stocks expected to open higher on Monday
By Leah McLennan05 Apr 2009 12:02 PM
SYDNEY, April 5 AAP - The Australian share market is likely to open higher on Monday after gains in US equities, before attention turns to the Reserve Bank of Australia's interest rate decision.
Economists are at odds over whether the RBA will cut rates at its meeting on Tuesday.
"There are good reasons for them to hold back and good reasons for them to cut," Commonwealth Securities senior analyst Craig James said.
In a survey, seven of 19 economists said they expected the cash rate to be cut by 50 basis points, three predicted a 25 basis point cut and nine expected the official cash rate would be kept at its 45-year low of 3.25 per cent.
Mr James said Australian equities were likely to open higher on Monday, adding to the local market's strong gains on Friday.
"We should get a gain of around one per cent, up around 30 points or thereabouts," he said.
"The oil price was reasonably steady and base metal prices continued to firm.
"The only area that is going to hold back the market is gold."
On Friday, the Australian share market closed stronger after gains from big miners and changes in the way banks value toxic assets in the US.
The benchmark S&P/ASX200 was 55.4 points, or 1.51 per cent, higher at 3,735.6, while the broader All Ordinaries gained 51.8 points, or 1.43 per cent, to 3,674.
US stocks shrugged off a dismal March jobs report to end higher on Friday, capping their fourth weekly gain amid market expectations that the economic contraction is easing.
The Dow Jones Industrial Average rose 39.51 points, or 0.50 per cent, at 8,017.59, closing above the psychological 8,000 level for the first time since February 9.
The tech-heavy Nasdaq composite climbed 19.24 points, or 1.20 per cent, to 1,621.87 and the broad-market Standard & Poor's 500 index was up 8.12 points, or 0.97 per cent, to 842.50.
In the US, the Labour Department reported the US unemployment rate in March leapt to a new 25-year high of 8.5 per cent as recession-battered employers shed another 663,000 jobs.
"It's encouraging that the US has digested another pretty horrible jobs figure," Mr Craig said.
In the US, corporate earnings reports and outlooks start pouring in this week.
"This week we see the start of the US earnings season, but really we won't get a lot of US companies reporting until the following week," Mr James said.
In economic news this week, the Australian Bureau of Statistics (ABS) housing finance data for February and the Westpac/Melbourne Institute survey of consumer sentiment for April are due on Wednesday.
On Thursday, ABS Australian labour market data for March will be released.
