The optimism generated by the better-than-expected US jobs is seen to redound to the stock market.
Analysts are bullish that Monday's trading will record some gains benefitting from the major averages posted by the Dow Jones Industrial Average, up 1.2% to close at 12862; the S&P climbed 1.5% at 1345; and the NASDAQ advanced 1.6% to end at 2906.
Ahead of the open, we are calling the Aussie market up 0.1% at 4390. There isn’t much on the economic calendar today, but investors will continue to focus on global macro-economic themes and local interest rate expectations.
IG Markets analyst Stan Shamu notes that "the S&P500 is having its best start to the year since 1987."
"The moves we saw in US and European trade on Friday suggest we might be in for a strong start to the week with cyclical plays in focus. BHP's ADR is pointing to a 1.4% gain at the open. Based on Saturday morning's close for the futures, we are calling the Aussie market up 1.2% at 4303," Shamu adds.
He is, however, negative on the performance of gold as the euphoria it generated last week may not be sustained this week with the European situation getting a nudge from the turmoil in Greece caught in debt talks.
This does not bode well for the Australian dollar. Shamu points out that risk currencies have opened weaker this morning, reflecting the uncertainty stemming from the Greek debt talks.
Shamu says "on the economic front, traders should keep an eye out for retail sales numbers and ANZ job ads data due out at 11.30am."
Ric Spooner, chief market analyst at CMC Market, agrees and adds that this figure will be the final piece of data leading into tomorrow's RBA rate decision.
He says that a weaker-than-expected reading for both would help cement the need for a rate cut.
Spooner adds that the "Australian reporting season gets under way in earnest this week with a number of major stocks including BHP, RIO, Newcrest and Telstra due to report. Companies with exposure to the Australian domestic economy are generally expected to have found the going tough in the December half."
Although this has generally been factored into current valuations, nervous sentiment toward equities is likely to see companies missing estimates or issuing negative commentary dealt with harshly.
"This might, however, foresee the cooling of the AUD/USD cooling in the near term, as lingering expectations that the RBA will cut rates another 25 basis points tomorrow and reduced scope for QE3 may result in a weaker AUD and stronger USD," says Shamu.
Analysts say the next couple of sessions will indicate the trend for consumer discretionary stocks. Airline and other travel related stocks will be on watch given the extremely cold weather in Europe at the moment.
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