Australian stocks expected to rise on the share market on Monday

AUSTRALIAN shares are expected to start the week on a positive note after Wall Street managed its second straight comeback on Friday.

Shares tipped to open stronger

AUSTRALIAN shares are expected to start the week on a positive note after Wall Street managed its second straight comeback on Friday.

The local futures market is predicting that the benchmark S&P/ASX200 index will rise by about 10 points, or 0.28 per cent, to 3534.

AMP Capital Investors chief economist Shane Oliver said the local market would advance modestly.

"I would say we'll be up 10 to 20 points, but it will remain a fairly volatile week," Mr Oliver said.

"Wall Street did manage to rally on Friday, despite a volatile night."

Higher oil and base metals prices would help lift the resources stocks this morning, he said.

"It is probably going to be one of those days where you see the resources side of the market doing reasonably well, on the back of gains in oil, gold and copper, but the banks will probably be down on ongoing worries about the global banking system."

A big event in the week ahead will be Barack Obama's inauguration as US President on Tuesday.

"Barack Obama's inauguration speech will be watched fairly closely," Mr Oliver said.

"The incoming Obama administration has the potential to provide a boost to confidence and is likely to provide a more vigorous and consistent approach to dealing with the current crisis."

US stocks closed moderately higher on Friday after an erratic session that had investors tussling with concerns about the ongoing problems in the banking industry in response to more billion-dollar losses at Citigroup Inc and Bank of America Corp.

Yet investors were also heartened by plans for both banks to restore themselves to profitability, and they were also willing to place bets on a range of consumer and industrial stocks.

The Dow Jones Industrial Average rose 68.73 points, or 0.84 per cent, to close at 8281.22 in a wobbly session that saw the market alternate between gains and losses.

The Nasdaq composite advanced 17.49 points, or 1.16 per cent, to 1529.33 and the Standard & Poor's 500 broad-market index added 6.38 points, or 0.76 per cent, to 850.12.

The Australian share market returned to positive territory on Friday on strong gains from the resource sector.

The benchmark S&P/ASX200 index closed up 21.4 points, or 0.61 per cent, higher at 3550.9, while the broader All Ordinaries gained 18.1 points, or 0.52 per cent, to 3494.9.

In the week ahead, the Australian Bureau of Statistics (ABS) lending finance data for November and TD Securities-Melbourne Institute Inflation Gauge for December will be released tomorrow.

The Westpac/Melbourne Institute Survey of Consumer Sentiment for January is published on Wednesday.

On Thursday, the Westpac-Melbourne Institute Survey of Consumer Unemployment Expectations for January, the Melbourne Institute Survey of Consumer Inflationary Expectations for January and the ABS sales of New Motor Vehicles Data for December will be published.

On Friday, the ABS international trade price indices for December is due.

In the US, housing data will be released along with a deluge of what are expected to be mostly bad corporate results.

"December quarter profit results will also start to flow in earnest and are likely to make bleak reading," Mr Oliver said.

Also this week, Chinese December quarter GDP data will be released.

"The Chinese data will be watched fairly closely," Mr Oliver said.

"If it's going to affect anything it will affect the (local) mining stocks."