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commodities, soaring oil set to boost bourse

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    Commodities, soaring oil set to boost bourse
    Florence Chong
    April 24, 2006

    THE Australian share market is likely to get a boost this week from oil and commodity prices.

    Higher commodities prices for copper, aluminium, zinc and gold along with the soaring oil price - which hit a new high of $US75 a barrel on Friday - will rub off on Australian resource stocks, according to analysts.

    A 26-point rise in the Australian Share Price Index on Friday could act as the precursor to today's trading, said AMP Capital Investors' head of investment strategy Shane Oliver.

    Dr Oliver expected the S&P/ASX 200 to rise 25-30 points.

    But Commsec's chief equities economist Craig James believed the reaction could be more mixed after Wall Street's soft close last week.

    The Dow Jones rose 0.04 per cent to 11.347.45, while the Standard & Poor's 500 Index was down 0.18 points at 1311.28.

    Rising oil prices could hurt consumers at the bowsers but investors only started to worry about their negative impact four to six weeks after Hurricane Katrina pushed prices up to $US71 a barrel. The market remained strong in September before a correction in October, Dr Oliver said. But the unknown factor was whether consumers had got used to paying more than $1.30 a litre for petrol, he added. If they have, then the effect on consumer spending should not be that great.

    Mr James said the prices of transportation stocks would fall.

    The ANZ Bank will be the first of the Big Four banks to report its half-year result on Thursday, with analysts expecting an interim profit of nearly $1.8 billion and a dividend payout of around 55-56c per share.

    Analysts told The Australian that the market had already factored the strength in business lending and healthy lending to housing into the price of banking stocks. A forecast record profit was not expected to boost the ANZ share price, therefore, unless the bank announced a surprise earnings upgrade or guidance, analysts said.

    Oil prices are today about 80 per cent higher than in January 2005 and more than three times the level of four years ago.

    Leading economists believed that the Reserve Bank would be "cognisant" of the adverse effect of high oil prices on household budgets when it meets on May 2.

    Writing in this week's Westpac Australian Weekly, the bank's chief economist Bill Evans said: "We retain our view that rates will be on hold for the remainder of 2006." Westpac forecast a headline Consumer Price Index of 0.9 per cent and a core figure of 0.6 per cent when the first-quarter CPI figures are released on Wednesday.

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