Strong start to week tipped for markets in Australia and US

The Australian sharemarket is poised to open in positive territory on Monday after US markets closed out last week at record highs.

The local sharemarket is tipped for a positive start to the week. Picture: NCA NewsWire/Bianca De Marchi

The Australian sharemarket is poised to open in positive territory on Monday after US markets closed out last week at record highs despite weaker-than-­expected jobs figures.

ASX futures are pointing to a 42-point, or 0.6 per cent, gain at the start of the week’s trade, with the big miners expected to show strength as the iron ore price scales near eight-year highs.

In overseas trade on Friday, miners BHP and Rio Tinto were firmly higher after the iron ore price rose by $US7.50, or 5.4 per cent, to $US145.30 a tonne, its highest point since March 2013.

Over the week, iron ore rose by $US14.35, or 11 per cent, amid Brazilian miner Vale’s latest production estimates, which were lower than expected, and surging Chinese demand for iron ore.

In London trade on Friday, Rio finished up 1.3 per cent and BHP closed up 1.7 per cent. Both miners are expected to add to last week’s gains when trade opens on the ASX on Monday morning.

As nations across the globe prepare for extensive vaccine rollouts, and amid hopes for the economic recovery that will follow, there is further upside potential for the iron ore price, according to CommSec chief economist Craig James.

“If the global economy gets a wriggle on, the vaccine rolls out, and case numbers start to go down … there could be more and more demand for steelmaking materials such as coking coal and iron ore,” Mr James said. “There’s certainly more upside potential than downside.”

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In the US on Friday, lower-than-expected job numbers in November spurred hopes that a new financial aid package will soon be agreed by congress.

This pushed sharemarkets to record highs, with the Dow Jones closing up 1 per cent for the week, the S&P 500 up 1.7 per cent and the Nasdaq up 2.2 per cent.

The US unemployment rate fell to 6.7 per cent, from 6.9 per cent, but the drop was caused by more people dropping out of the workforce entirely. And the jobs report showed that a key sign of holiday enthusiasm — the hiring of thousands of workers to help with the holiday retail rush — simply didn’t happen this year.

COVID-19 rates are spiking throughout the US, depressing economic activity. Vaccines may be approved as soon as this month, but they won’t be widely distributed until well into 2021.

Additional reporting: Dow Jones Newswires