Waiting for rates decision

Published in the Daily Telegraph, August 2009

The share market is expected to open flat today after US markets closed on an uninspiring note and in anticipation of the Reserve Bank interest rate decision tomorrow.

US stocks mostly slipped on Friday after a weak consumer sentiment report offset positive news from computer maker Dell and chipmaking giant Intel.

The Dow Jones Industrial Average lost 36.43 points, or 0.38 per cent, to end the week on 9544.20, ending an eight-day winning streak.

The Nasdaq composite climbed 1.04 points, or 0.05 per cent, to 2028.77 while the Standard & Poor's 500 index shed 2.05 points, or 020 per cent, to 1028.93.

CommSec chief economist Craig James said investors would be cautious ahead of the Reserve Bank board meeting on Tuesday.

That will see a bit more caution come into the market."

The bank is expected to leave interest rates unchanged but some economists have brought forward their expectations for the first rate rise to occur later this year.

Mr James said the local share market was likely to open flat after a mixed lead from the US.

"We will be down a modest degree, something in the region of 10 to 15 points, but nothing too dramatic," he said.

"The local share market has come a long way in a short period of time and we might see some consolidation moving into the market.

"There was profit taking on the New York market on Friday, with the Dow Jones down, although the Nasdaq was slightly higher."

Mr James said higher oil and gold prices should help lift the local resources sector.

Wealth Within chief analyst Dale Gillham said he expected the markets to fall slightly during September.

"It now looks as though the market will rise in October, which I expect will be the high for the year, before it falls again in November," he said.

"That said I still believe the market will struggle to move through 4600 points in the short term although there is a possibility it could trade to 4950 points before the move down into the November low.

"When the market does move down, I believe price will fall below 4000 points and most likely trade to around 3800 points into November.

"Given this, we can assume that we are now near the top of the current bullish move, therefore investing heavily in the market right should be avoided unless a low risk opportunity with good potential for profit arises."

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