Investors hope for Santa rally to end 2016

(Australian Associated Press)

Investors will be hoping for the start of the traditional “Santa rally” when trading resumes on the Australian share market following the Christmas break.

The local market is expected to get a boost when trading starts on Wednesday after the Dow Jones Industrial Average ended last Friday by recording its seventh consecutive week of gains.

Trading volumes, however, are expected to be thin given many investors will still be enjoying their festive break.

The benchmark S&P/ASX 200 index dipped 0.3 per cent to close at 5,627.9 points in a shortened trading session on Friday, but still managed to post a gain of 1.7 per cent for the week.

Local investors sold shares in miners, retailers and financials ahead of the Christmas holiday break, bringing an end to a four-day winning streak.

Despite Friday’s dip, the S&P/ASX 200 is on track to record a six per cent rise for 2016, with only three trading sessions left for 2016.

AMP Capital chief economist Shane Oliver expects the local share market will post solid returns of about nine per cent during 2017, aided by the recent rebound in bulk commodity prices.

“Shares are likely to see their traditional Santa Claus rally over the Christmas/New Year period,” he said.

“However, at some point in the first quarter a correction or consolidation in shares and the US dollar is likely as sentiment has become very stretched on the upside in relation to both and a bout of nervousness will no doubt kick in regarding what (president-elect) Donald Trump will do, US-China tensions and the negative impact of the rise in the US dollar.”

With no local economic news due on Wednesday and few company announcements expected, investors will be keeping an eye on the listing of Perth-based real estate and financial services group Ausnet Financial Services.

The company was recently the subject of a reverse takeover by listed gold, silver and base metals exploration company Namibian Copper.

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