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Oz share market braces for Italian results

AAP logoAAP 4/12/2016 Jacqueline Le

Interest rates are unlikely to change at this week's Reserve Bank meeting but the Australian market could be rattled by the results of the Italian referendum.

Italians will on Sunday vote on reducing the powers of Italy's Senate, which Prime Minister Matteo Renzi hopes will help make it easier to revitalise Italy's economy.

Analysts are worried that if the referendum fails, Italy's political environment could become volatile, and anti-establishment parties could call for a referendum on whether Italy should quit the euro zone.

"There's a bit of a mixed lead-in for our share market on Monday," CommSec chief economist Craig James told AAP.

"What we will react to is the Italian referendum results."

Mr James says if the "no" vote succeeds, it could lead to fresh elections in Italy.

"That will certainly spark some uncertainty in the financial markets and probably push the euro down."

However, a higher ore and gold price could help lift local shares on Monday.

As the week goes on, the focus will turn to Australian data, with an interest rate decision on Tuesday, and the release of economic growth figures on Wednesday.

Mr James says the market is not expecting a change to the current cash rate of 1.50, which has been in place since August.

Australia's economic growth for the previous quarter is also likely to be modest.

"Most economist believe there's probably very modest growth in the quarter, probably something like 0.2 or 0.3 per cent," he said.

"There was strong growth in the previous quarter, so you'd expect there would be a correction in terms of the September quarter. I think that's going to be the case."

The local share market will also be closely watching the release of Chinese trade and inflation figures this week.

While not front of mind, international markets will continue to brace themselves for any announcements linked to Donald Trump's election as US president.

"It's very much a 'watch and breathe', we're just watching day by day to see the appointments to his advisors and cabinet," Mr James said.

"This is just an ongoing focus as we wait until his inauguration in January."

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