ASX 200 futures point to Monday bounce as China stimulus and US economy buoy investors

Our sharemarket is tipped to build on last week’s record close as investor enthusiasm continues over the condition of the world’s major economies ahead of local retail and US jobs data.

The local bourse is set to open higher on Monday. Picture: AFP

The Australian sharemarket is expected to extend its record high set last week when it opens on Monday, amid upbeat sentiment from investors following a combination of solid US economic data and China’s pledges of more stimulus.

Bullish sentiment will be put to the test, however, as the US government releases closely watched labour market data following a series of disappointing job reports, and domestically investors will pore over key spending data.

Futures markets pointed to a 0.3 per cent bounce on the ASX 200 at Monday’s opening. The benchmark had closed flat for the week after two weeks of gains. Any advance on Friday was concentrated in materials, which rose 9 per cent for the week as China’s stimulus pledges bolstered optimism about iron ore, copper and lithium demand.

AMP chief economist Shane Oliver said equity markets had risen on expectations for a continuation of a “goldilocks” macro outlook on the back of central bank rate cuts reinforced by news of aggressive Chinese policy stimulus.

“The success in getting global inflation down, ramping up central bank policy stimulus (with nearly 50 per cent of central banks now cutting rates) and China moving to ‘whatever it takes’ policy stimulus are all very positive for shares on a six to 12-month horizon, particularly if we continue to avoid recession,” he said. “We are also now coming into a positive time of the year for shares from a seasonal perspective after they performed surprisingly well through the normally weak months of August and ­September.”

Wall Street’s benchmark S&P 500 is up by 20 per cent, year to date, after it eased 0.1 per cent from a high set on Thursday. The index is on track for its strongest January to September performance since 1997.

The Nasdaq retreated by 0.4 per cent following a drop in tech giant Nvidia’s share price amid reports China was urging local companies to stay away from its chips.

The Dow Jones Industrial Average rose 0.3 per cent on Friday to a fresh high as all three Wall Street indices logged their third-consecutive week of gains.

Hope for an economic soft landing in which the US Federal Reserve tames inflation without hurting growth has helped drive those gains, along with a 50 basis point rate cut the central bank delivered at its monetary policy meeting this month. But the focus this week will be on US job data, with September payroll growth likely to show another subdued gain of about 140,000 and unemployment staying at 4.2 per cent.

Friday’s drop could be key as to whether the Fed will cut rates again by another 0.5 percentage points in November.

Australian retail sales figures on Tuesday are the main local data of interest and financial markets forecast consumer spending to increase 0.5 per cent in August.

Fed chair Jerome Powell will speak in Nashville on Monday.

China’s purchasing managers’ index is out on Monday, which is expected to show a lift in PMI from 50.3 to 50.5. China has lowered interest rates and injected liquidity into the banking system as Beijing assembled a last-ditch stimulus assault to meet its growth target of 5 per cent for 2024.

Australian retail sales figures on Tuesday are the main local data of interest and financial markets forecast consumer spending to increase 0.5 per cent in August.

The dollar was buying US69.05c after a 1.4 per cent gain in the past week.

Brent crude – the international standard – gained 0.5 per cent to trade slightly below $72 per barrel as it recovered some of the previous session’s losses caused by Hurricane Helene forcing Gulf of Mexico producers to cut output.