Australian shares in for a rollercoaster week

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THE Australian share market has had a bad ride of late and the rollercoaster is set to continue until the US presidential election.

The benchmark S&P/ASX 200 index dropped 0.2 per cent on Friday and fell 2.7 per cent over the week, its biggest weekly decline since mid-June. Its set to open slightly lower on Monday following a late fall from Wall Street after the FBI announced it was reopening its investigation into US presidential candidate Hillary Clintons emails, AMP Capitals chief economist Shane Oliver said.

Its probably going to be a bit of a rollercoaster if it turns out theres not much in those emails, he said. Weve seen this in the past. Whenever theres more confidence regarding Hillary winning, the US share market goes up.

Locally the highlight will be the Reserve Bank of Australias interest rate decision, with expectations for a rate cut on Melbourne Cup day at just four per cent.

Dr Oliver said rates will likely be kept on hold because there has been reasonably solid economic data in Australia and a bounce back in commodity prices, even though last weeks underlying inflation numbers were on the soft side.

New RBA governor Philip Lowe has implied a reluctance to cut rates quickly, he said.

You get the impression hes a bit more focused on financial stability and a bit concerned that if they continue cutting it will serve to fuel the strength in home prices in Sydney and Melbourne, Dr Oliver said on Sunday.

Also out this week are Australian retail sales, which will probably show a rise of at least 0.2 per cent for the month of September but could be down for the September quarter.

Buildings approvals figures released on Wednesday will probably drop after a big spike a couple of months ago, Dr Oliver said.

The focus of the US market will be the upcoming presidential election, the Federal Reserve meetings, employment numbers for October and company earnings reports.

Profit reporting season is causing a few gyrations on Wall Street and thats going to continue through the week as about 100 of the S&P 500 companies are due to report in the US, Dr Oliver said.

The US Federal Reserve will meet this week and is expected to signal it is on track to raise interest rates in December, he said.

US sharemarkets ended lower on Friday. Shares in Amazon fell by 5.2% after the on-line retailer warned that investments in the holiday season had the potential to crimp profits. The Dow Jones index ended lower by 8.5 points or 0.1% after being up 88 points in early trade in response to economic growth data. But the Dow was also lower by as much as 75 points in afternoon trade. The S&P 500 index fell by 0.3% while the Nasdaq lost almost 26 points or 0.5%. Over the week the Dow rose by 0.1% but the S&P 500 fell by 0.7% and the Nasdaq lost 1.3%.