ASX 200: Investors turn to key growth, housing and construction numbers

The Australian sharemarket is expected to have a subdued opening on Monday, taking some lead from a confidence-building rise on Wall Street heading into the weekend.

A string of key economic releases this week will shed further light on the strength of the Australian economy. Picture: Getty Images

The Australian sharemarket is expected to have a subdued opening on Monday, taking some lead from the confidence-building 1.76 per cent rise on Wall Street heading into the weekend but lacking a clear signal from the US with its markets closed for the Memorial Day holiday early in the week.

Share futures in Australia traded 1.2 per cent higher at the weekend. Local investors will be pouring over a host of key economic indicators this week, both from the US and domestically, with the GDP figure for the March quarter released on Wednesday to shed further light on the strength of the economy.

The market forecasts growth at 0.6 per cent, or around 2.9 per cent on a year-on-year basis, the lowest since the September quarter last year.

This week will likely also see the beginnings of speculation and chatter about the next possible lift in official interest rates with the Reserve Bank to meet Tuesday week and possibly continue the lift in rates that was kicked off in May when the official cash rate was raised by 25 basis points to 0.35 per cent. The Commonwealth Bank expects the RBA will raise rates by 25 basis points at its June meeting.

Data on housing prices this week is expected to show initial house price weakening.

In the US, after the Memorial Day public holiday on Monday, the main focus is likely to be on May job data, released on Friday, which is expected to show payrolls up 330,000, unemployment falling slightly to 3.5 per cent and wages growth slowing slightly to 5.2 per cent year on year from 5.3 per cent previously.

The Bank of Canada on Thursday is likely to raise its official cash rate by another 0.5 per cent taking it to 1 per cent with the central bank there remaining hawkish citing the risk of higher inflation expectations as well as citing concerns about the global growth outlook.

Eurozone confidence data for May is likely to show a softening, core inflation on Tuesday is likely to show a further rise and unemployment on Wednesday is likely to remain at 6.8 per cent.

In Australia, March quarter GDP is expected to be flat and up 2.3 per cent year-on-year, with drags from net exports (which are expected to detract 1.8 percentage points) and dwelling investment, weak growth in business investment and solid growth in public spending and consumption.

In other data releases, AMP chief economist Shane Oliver said he expects building approvals to show an 8 per cent gain after plunging in March and housing credit growth to remain solid – both figures out on Tuesday.

Mr Oliver expects CoreLogic data for May due out midweek to show a 0.3 per cent decline in average capital city prices led by a 1 per cent fall in Sydney and 0.6 per cent fall in Melbourne, while the trade surplus data due on Thursday is set to fall back to $8.5bn and housing finance for April, due on Friday, to fall 0.5 per cent.