Stocks expected to dip on US data leads

Economic data, both global and domestic, could call the shots for the market through the week.

A woman walks past the New York Stock Exchange (NYSE) at Wall Street. Picture: Angela Weiss / AFP

Economic data, both global and domestic, could call the shots for the market through the week.

The local sharemarket is likely to open in negative territory on Monday but could turn around during the week despite the public holiday as it reacts to a slew of domestic and US economic data to be released in coming days.

ASX futures are pointing to a 0.12 per cent or eight-point dip following bearish leads from Wall St after a week of Biden-inspired growth.

IG market analyst Kyle Rodda said this week the market would be taking cues from US economic data.

“There’ll likely be too a level of positioning going in the market ahead of a big week, which will include advance US GDP data, a Fed meeting, and the meatiest week of the US earnings season,” Mr Rodda said.

AMP Capital chief economist Shane Oliver said earnings of the US companies that had reported so far had largely exceeding expectations.

“Its early days in the US December earnings reporting season with just 13 per cent of S&P 500 companies having reported but so far it’s been strong with 89 per cent surprising on the upside by an average 28 per cent,” he said.

“As a result, consensus expectations are getting revised up with earnings likely to have made it back to pre-COVID levels.”

The Federal Reserve will meet over January 26 and 27, while the local market is closed for Australia Day, with most observers expecting that chair Jerome Powell will reiterate the strategy of keeping rates low and bond buying high until the US economy recovers further.

On the domestic front, the market will be concentrated on inflation and trade figures, with the Australian Bureau of Statistics to release consumer price index figures for the December quarter on Wednesday, followed by the producer price indexes on Friday.

CommSec chief economist Craig James said the figures were unlikely to indicate any change to the subdued rate of inflation.

“The CPI is expected to have lifted by 0.9 per cent in the quarter, boosted in large part by childcare costs,” he said.

“In annual terms the headline measure is tipped to remain unchanged with growth of 0.7 per cent, while the trimmed mean maintains annual growth of 1.2 per cent.” On Thursday, the ABS will release the international trade price index of import and export prices.

On Friday the RBA will release private sector credit data, with consensus estimating a 0.2 per cent lift in loans.

Dr Oliver said continued subdued inflation would keep interest rates at low levels, meaning the market should keep rising.

“Beyond short-term uncertainties we continue to see shares heading higher this year on the back of reopening, recovery and easy money, with the ASX 200 likely to hit 7200 by year end,” he said.