The Australian share market is tipped to open lower in a cautious start to the week on the back of losses in Europe and the United States on Friday.
The losses are thought to be a case of some investors rushing to take profits after a week of gains and before the market fell due to fresh European concerns.
Just as European ministers approved a rescue of Spanish banks last week, the region of Valencia said on Friday it would ask for a bail-out through a new national fund.
On the ASX 24 on Sunday at midday (AEST), the September share price index futures contract was pointing to a 21-point loss at 4144 on volume of 4,798 contracts traded.
Australia’s benchmark S&P/ASX200 index and broader All Ordinaries both eased on Friday but were up by nearly three per cent for the week to be at near two-month highs.
On Wall St on Friday, the Dow Jones Industrial Average was 120.8 points (0.9 per cent) weaker at 12,822.60.
The S&P 500-stock index shed 13.05 points (1.0 per cent) to 1362.66, while the tech-rich Nasdaq dropped 40.6 (1.37 per cent) to 2925.30.
London’s benchmark FTSE 100 index of top companies was down 1.1 per cent to 5,651.77 points, Frankfurt’s DAX 30 retreated 1.9 per cent to 6,630 points, and in Paris the CAC 40 gave up 2.14 per cent to 3,193.89 points.
Oil and base metals prices also fell on Friday.
CommSec’s chief economist Craig James said last week had been very good on the markets for non-resources stocks but the current volatile economic times meant investors were taking profits where they could.
“If new jitters come in (such as the Spanish regional bail-out request) then it is time to take profits and I think that’s what characterises a lot of what happened on Friday,” he told AAP.
The Australian dollar was trading at three-month highs of 104.09 US cents at the end of Friday, but had eased on Sunday afternoon to 103.77.
“The Aussie (currency) has held up to a greater extent than the euro … I think there’s greater optimism too about Australia’s prospects with a potential lift in terms of Chinese output,” Mr James said.
“I think there will be a little bit of caution early in the week (on the share market) because of inflation figures out on Wednesday.”
The release of consumer price index (inflation) data for the June quarter on Wednesday will be preceded by a speech by Reserve Bank Governor Glenn Stevens on Tuesday.
Economists are expecting a 0.6 per cent rise for the quarter, meaning a fall in the annual inflation rate to a benign 1.9 per cent, below the Reserve Bank’s 2-3 per cent target.
There would be scope for the Reserve Bank to then cut interest rates next month, Mr James said.
