US fall likely to be copied
Published in the Daily Telegraph, May 2010
The local market is expected to fall back into old habits this morning and take its lead from the gyrations on Wall Street.
While the market picked up in the dying days of last week, with the benchmark S&P/ASX200 index closing up 78.3 points, or 1.79 per cent, to finish at 4457.5 points and the broader All Ordinaries index up 79.9 points, or 1.82 per cent, to finish at 4479 points, today's start is expected to mirror Wall Street's Friday fall.
The Dow Jones index lost 122.36 points, or 1.19 per cent, at 10,136.63 ahead of a long holiday weekend.
The US stocks fell after ratings agency Fitch cut Spain's credit rating, which then revived investor anxiety that financial woes in the eurozone could hurt global economic recovery.
Investors also took profits from big gains on Thursday.
The broader S&P 500 index dumped 13.65 points, or 1.24 per cent, to 1089.41, and the technology-laden Nasdaq Composite index fell 20.64 points, or 0.91 per cent, to 2257.04.
CommSec chief economist Craig James said the Australian share market was likely to open lower today. “You usually have your position-taking, squaring, profit taking at the end of the month," Mr James said.
"The expectation is that our market will be down something like 40 to 50 points.
"It may not get as bad as that. It may be only 20 to 30-odd points because, fundamentally, there isn't any great need for a sell-off."
Wealth Within chief analyst Dale Gillham said the end may be in sight for the market's downward trend. "While the market has been volatile over the past few weeks, it now appears to be holding its ground, which means we could reasonably expect the All Ordinaries index to rise up to my target level of around 5200 points into late July," he said.
"But as always only time will tell."
THERE is a lot of economic data for investors to consider this week.
In the US, a jobs report at the end of the week is likely to be the main focus, with some economists expecting that up to 500,000 jobs were created in the month.
"If that's the case, certainly investors will start focusing on the fundamental improvement that we're seeing in the US economy rather than fretting about possible surprises in Europe," said CommSec's Craig James.
On the economic front today, the Australian Bureau of Statistics releases data on the balance of payments and international investment position for March.
Tomorrow, the Reserve Bank will hold its monthly board meeting and make its decision on interest rates.
The ABS also releases data on retail trade and building approvals for April.
On Wednesday, the ABS releases the national accounts, including gross domestic product for the March quarter.
On the company front, tomorrow, food and consumer goods distributor Metcash releases its full year results.
