Share market tipped to open lower

THE share market is likely to decline when it opens this week after US shares and commodities declined late on Friday. At the same time, the Reserve Bank is expected to keep the cash rate unchanged.

Trading volumes may be lower on Monday as NSW, the Australian Capital Territory and South Australia will be on holiday for Labour Day.

"Markets have entered a consolidation phase," CMC Markets market analyst David Taylor said.

"The economic data from the US isn't supporting current valuations and the market has to catch up to the economic reality."

US Stocks posted modest losses on Friday after a disappointing monthly jobs report and a surprise drop in factory orders brought fresh concerns that an economic recovery may be a long way off.

The Dow Jones Industrial Average fell 0.2 per cent to 9,487.67, the S&P500 index declined 0.5 per cent to 1,025.21 and the Nasdaq composite index dropped 0.5 per cent to 2,048.11.

Commodities including copper and oil also declined on the economic data, although gold gained.

On the Sydney Futures Exchange the December share price index closed 21 points lower at 4588 late on Friday.

The benchmark S&P/ASX200 index closed down 99.4 points, or 2.11 per cent, at 4601.7 points, while the broader All Ordinaries index fell 95.9 points, or 2.04 per cent, to 4606.1 points.

"September was meant to be a bad month but October may be that bad month," Mr Taylor said.

He said he expected the market to decline between 5 and 10 per cent in a correction before rising into the year-end.

In economic news this week, the RBA is expected to leave the overnight cash rate unchanged on Tuesday at a 49-year low three per cent for the sixth month in a row.

Fourteen of 16 economists surveyed by AAP said the RBA would leave the overnight cash rate unchanged, following its monthly meeting on Tuesday.

"As far as the rates decision is concerned, I would be very surprised if there was one (a rise this week)," Mr Taylor said.

But, Mr Taylor said, the interest rate futures market was pricing in a 25 basis point rate rise in November.

Economic data due out this week include the international trade in goods and services figures for August, housing finance figures for August and employment figures for September, all from the Australian Bureau of Statistics.

The Australian Office of Financial management plans to auction $700 million of 2014 bonds.

Treasury Secretary Ken Henry is due to speak on Friday at the Senate inquiry into the federal government's economic stimulus measures.


Shares to start trading week higherStocks tumble amid investors’ worries