CommSec chief economist Craig James.
CommSec chief economist Craig James.

Resources set to lift market

THE Australian sharemarket is tipped to open higher on the back of strong performing metals and the US.

CommSec chief economist Craig James said the futures index was pointing to a 21-point gain at the start of trade today.

He said despite the major preoccupier for international markets was the simmering trade dispute between China and the US, the local market has had some positive signs in the resources sector.

"Iron ore, gold and base metals were all higher on Friday which sets us up for a reasonable day,'' Mr James said yesterday. He said the only drag on the market was oil, down 0.7 per cent.

Wall Street swung to a positive finish on Friday night despite being buffeted by the US-China trade turbulence and a set of disappointing economic data. The benchmark Dow Jones Industrial Average gained 0.6 per cent to close the week at 25,462.58,

Mr James said the Aussie dollar was sitting comfortably at US74¢ after rising a third of a cent on Saturday in New York trade.

The Reserve Bank of Australia, which is planning its monthly meeting later this week, won't change interest rates, Mr James predicted.

He said he was not worried about the drop in housing prices. He said it was "good news" for buyers as supply continues to put downward pressure on the market.

"Fifteen per cent growth last year in Sydney and Melbourne was not sustainable and falls of 5 to 6 per cent are not either," he said. "It's a normal outworking, nothing to be too concerned over."

As reporting season starts for major companies Mr James expects a "relatively good" season but "nothing sensational".

Meanwhile, Asian countries attending at the ASEAN summit in Singapore have voiced concern yesterday about the potentially devastating impact of a US-China trade war, with ministers calling for the acceleration of talks for a Beijing-backed free trade deal that excludes the US.

Fear that a simmering trade spat between the world's top two economies could spiral into a full-blown trade war - with painful consequences for China's neighbours - some nations have called for the early conclusion of talks for the Regional Comprehensive Economic Partnership.

RCEP is a 16-nation pact poised to become the world's largest free trade agreement, covering about half the global population.