Australian stock market expected to open lower on may 7 2012

Australian stock market expected to open lower on may 7 2012 : The Australian stock market is expected to open lower on Monday following solid falls in the US and Europe on Friday. It will be a busy week in terms of news affecting the markets, beginning with national elections in France and Greece. The oil price also ended Friday lower, base metals prices were mixed and the gold price improved.

Wall St stocks closed on a low note for the week, including a 1.61 per cent fall on the S&P 500 to 1,369.10 points with similarly heavy falls on the Dow Jones industrial average of 1.27 per cent while the tech-heavy Nasdaq was down slightly more by 2.25 per cent.

The poor performance in the US was largely due to investors squaring positions and taking profits ahead of the French and Greek elections on Sunday, CommSec chief economist Craig James said.

If there were changes in government in both those countries it would create doubt in the markets about their respective abilities to continue to cut spending, drive economic growth and turn around their debt problems, he said.

"It could end up providing a lifeline for our markets if the results are more market friendly than currently expected," Mr James said.

"I think it will be down, but we will be waiting on the election results or early indications anyway to see whether that provides guidance and perhaps the expectations of the futures market won't be realised."

Australian shares had a flat week last week, losing just 0.6 point in value on the S&P/ASX200 after losses on Friday.

On the ASX 24, the June share price index futures contract was 51 points lower at 4,340 points on Sunday pointing to a 1.16 per cent weaker opening on Monday.

Mr James said he thought overseas markets had over-reacted on Friday, with the unemployment rate in the US at three-year lows.

The big news in Australia this week is Tuesday's federal budget.

AMP Capital chief economic Shane Oliver said he expected the Federal Government to announce a $1 billion surplus for 2012-13.

However, the 2011-12 deficit had probably blown out to $42 billion, he said.

Important economic data will be released on Monday, including job ads for April, the NAB business survey confidence survey and retail trade for March.

Economic data from Australia's crucial trading partner China will be released on Friday, including inflation, investment, retail sales and production.

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