Australian shares are expected to bounce back on Monday after losing ground on Friday, ending a five-week run of gains.


On Sunday afternoon, the ASX 200 futures index was pointing to a promising start to the week and was up 25 points to 4,357.

That followed a rally by US stocks on Friday to offset Thursday’s selling, including the Dow Jones Industrial Average gaining 0.8 per cent to 13,158.00, the broader S&P 500 lifting by 0.7 per cent to 1,411.13 and the tech-rich Nasdaq climbing 0.5 per cent to 3,069.79.

European stock markets were mostly higher, with the EURO STOXX 50 index increasing by 0.2 per cent to 2,434.23.

CommSec economist Craig James said one obstacle that might prevent a positive start in Australia were headwinds that miners were providing.

Dual-listed global giants BHP Billiton and Rio Tinto lost about 1.5 per cent in value in London trade, with Rio, which is heavily focused on iron ore mining, losing 4.4 per cent earlier in Australia.

That came in the week that BHP’s decision to shelve the massive Olympic Dam mine expansion in South Australia had some market commentators and politicians declaring the end of the mining boom.

“The iron ore price continues to retreat, there are still some doubts about China and in this sort of environment, mining and energy stocks are on the backburner,” Mr James told AAP.

“But investors are certainly embracing the defensive type stocks, such as Telstra, retailers and the banks are doing OK.

“There should be enough positives there to offset negatives in the mining sector.”

At the close on Friday, the benchmark S&P/ASX200 index was down 34.7 points, or 0.79 per cent, at 4,349.0, while the broader All Ordinaries index was down 35.3 points, or 0.8 per cent, at 4,376.5.

The focus will be on the final week of the June half profit reporting season, with Caltex, Toll Holdings and Billabong reporting on Monday.

AMP Capital’s head of investor strategy Shane Oliver said the earnings season had been surprisingly positive, with 33 per cent of results coming in so far better than expected and 16 per cent worse than expected.

Economic news this week includes June quarter construction activity figures being released on Wednesday and capital expenditure on Thursday, with the latter to provide an insight into whether mining activity has slowed.

Modest gains are tipped for both.

The Australian dollar fell to 104.06 US cents on Sunday.