outlook for tomorrow - good

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    The market is likely to rise tomorrow, which will cushion some of the damage caused by October jitters, close the books for October 2005; and set the stage for a November rally.

    Bring it on.

    Shares tipped to surge on good news from US
    By Richard Webb
    October 30, 2005

    Hang on to your hats: shares are tipped to surge up to 50 points higher tomorrow following booming news on the US economy on Friday night.

    US stocks soared 1.7 per cent higher on Wall Street on Friday following the release of data showing that US economic growth had quickened to 3.8 per cent in the three months to the end of September without spurring a rise in underlying US inflation.

    CommSec's chief equities economist Craig James said it was the "best of both worlds" for the world's biggest economy.

    "Hopefully, fingers crossed, we will have the same sort of rally on Monday as we saw on Wall Street on Friday night . . . things are starting to look very good for the global and Australian economies," he said.

    Mr James said local shares were attractive at current levels. He predicted that the sharemarket should be up by 30 to 40 points tomorrow. AMP Capital Investors head of investment strategy Shane Oliver was more bullish.

    "We could be up by 50 points," he said. "The market fell 50 points on Friday in response to a fall on Wall Street on Thursday night and we have now seen pretty good growth in US GDP and a fairly benign reading on inflation."

    Dr Oliver said it was going to be an interesting week in terms of economic releases. He said it had been "paranoia over inflation" that had caused such a rocky month for shares and that it had been US survey findings on rising business costs for September that had started it. These same readings for October are due this week.

    In addition, both the Federal Reserve and Australia's Reserve Bank meet on Tuesday to consider interest rates - the Fed is almost certain to lift rates by 0.25 percentage points, while both Mr James and Dr Oliver believe rates are on hold in Australia until next year.

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