Local stocks expected to open higher

The Australian stock market is expected to open higher on Monday after gains on Wall
Street, before attention shifts to the Reserve Bank of Australia's (RBA) quarterly
statement on monetary policy.
The Dow Jones industrial average gained 248.02 points or 2.85 per cent to close at
8,943.81 on Friday, while the Standard & Poor's 500 index also rose 2.9 per cent
after two days of heavy sell-offs.
"We had a positive session on Wall Street and European markets were higher, so we
should get a modest gain on our markets on Monday," CommSec chief equities economist
Craig James told AAP.
"The futures market is pointing to gains of around about 24 points and we certainly
wouldn't argue with that."
Mr James said banking and industrial stocks should see some gains, but mining and
energy stocks are likely to come under pressure after commodity prices fell amid
concerns of a global slowdown.
The RBA will release its latest economic forecasts in its quarterly statement on
monetary policy on Monday.
"Investors will be watching that one closely to see whether there are any
indications of the next move in interest rates from the Reserve Bank," Mr James
said.
AMP Capital chief economist Shane Oliver said the statement on monetary policy is
likely to reveal a downwards adjustment to growth forecasts and greater confidence
that inflation will fall.
"We expect it to leave the door wide open for further interest rate cuts," Mr Oliver
said.
The RBA last week cut the cash rate by 0.75 percentage points to 5.25 per cent,
leaving the official interest rate at its lowest point in five years.
Other key economic data out this week include the Australian Bureau of Statistics
(ABS) housing finance, labour price index and lending finance data for September.
Meanwhile, Mr Oliver said with commodity prices likely to remain under pressure and
more interest rate cuts expected, the Australian dollar is likely to remain weak
into mid next year.
"We remain of the view that this is a cyclical downswing and that the long-term
trend in the Australian dollar will remain up as commodity prices are likely to
resume their long-term rising trend later next year and into 2010," Mr Oliver said.
The week will see annual general meetings for a number of companies, including the
Seven Network, CBH Resources Ltd, Computershare, BlueScope Steel and Orica's annual
results.