The Australian market seems primed to extend its rally. Your checklist for the week

Jessica Amir wrote a column · May 13 02:13

The Australian share market still underperforms the US, with the ASX200 up 14.2% from its October low but now trades 2.3% in striking distance of its record all time high. We explore what could support the Aussie market finally gaining more legs this week, from Federal Budget stimulus being announced to the potential weakening of Aussie employment. Here is what to watch

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- Should Australian employment fall as expected and the jobless rate rise, we could see rate cut bets being brough back to the table. Australian employment data for April is expected to show the jobless rose from 3.8% to 3.9% (consensus), with data out Thursday May 16

- Better than expected Chinese industrial Production data could revive Australia's mining sector, which is hugely important to the ASX200 $S&P/ASX 200(.XJO.AU)$ given the mining sector accounts for 22.5% of the index. If the US dollar falls after CPI data, it could support commodity prices rising and Aussie mining sector moving up.

- The breadth of the Australian market rally has extended; with 71% of the ASX200 companies trading above their 200-day moving averages which is a bullish sign. See the below chart.

- Plus we are following the US higher which is being buoyed by stronger than expected US companies earnings, the breadth of the rally extending, the US markets' fear gauge- the VIX $CBOE Volatility S&P 500 Index(.VIX.US)$ trades at four-month lows, plus there is bullish put/call open interest ratio (which is a bullish signal) And lastly bets remain for the Fed to cut rates in November and December. Click for more US data points.

- When it comes to the Australian Federal Budget being handed down on Tuesday night. I always say

where macro funds go, investment flows. So the budget, for investors the Budget is a great resources to look at, as it tells you what sectors you could consider paying attention to.

From what we understand, it seems a focus for investors might be on Australian infrastructure contractors and commodity companies. For example it seems Infrastructure will get another boost, so you might for investors this mean y ou might want to keep an eye on engineering groups like Worley $Worley Ltd(WOR.AU)$.

We also know the Government said it's focused on supporting Australian industry, and green energy, and it's already made commitments to some companies like Alph HPA $Alpha HPA Ltd(A4N.AU)$, Renascor Resources $Renascor Resources Ltd(RNU.AU)$ so you might want to watch those and companies like Lynas Rare Earths $Lynas Rare Earths Ltd(LYC.AU)$

We will be covering potential budget beneficiaries in the days after the budget so stay tuned to moomoo