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Market set for strong start after US lead

AAP logoAAP 4/09/2016 Andrew Leeson

The Australian share market is tipped to make a strong start to a busy week of data releases on the back of gains on Wall Street.

US and European markets rallied on Friday after lower than expected US jobs data reduced the chance of an interest rate rise by the US Federal Reserve, AMP Capital chief economist Shane Oliver told AAP.

"The odds are, because of those benign jobs numbers, that the Fed will hold off raising rates in September. That of course saw the share market rally," Dr Oliver said.

Also bolstering the chances of a positive start is a jump in oil and iron ore prices with the ASX 200 futures pointing to a 35 point gain in the market on Monday.

"We should be in for a decent rise ... largely reversing a 43 point fall that we saw on Friday," Dr Oliver said.

Locally, interest rates are likely to be left on hold when the Reserve Bank of Australia meets on Tuesday as not much has changed since the last shift in August, he said.

But a speech from incoming RBA governor Philip Lowe will be closely watched for pointers to how he'll approach his new post.

Elsewhere, an update of Australia's trade deficit is expected to show it remains "deep in deficit territory", he said.

The GDP data for the June quarter, to be released on Wednesday, is likely to show growth dipping to 0.4 per cent, as weakness in mining investments and trade figures fall from earlier unsustainable highs, but the annual growth rate could increase, Dr Oliver said.

"Overall the picture will be one of reasonable economic activity, if you cut through the volatility, which has been caused by export volumes," he said.

Internationally the US is in for a quiet week, led by the Labor Day public holiday on Monday while the European Central Bank is expected to leave monetary policy on hold in a meeting on Thursday.

Increased attention will be on China as the country releases trade data and hosts the G20 summit but the meeting usually has little impact on markets, Dr Oliver said.

"They really only have a market impact when in times of crises ... we're not in that at the moment, so we are unlikely to see any groundbreaking developments from the G20," he said.

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