The Australian share market is poised to test an eight-month high as consumer sentiment and year-ahead inflation expectations in the US suggest an improving outlook.

Economic Calendar and News

Investors will be looking ahead to Australian jobs data scheduled for release on Thursday, with the figures set to shape expectations as to how the Reserve Bank of Australia manages monetary policy.While the unemployment rate is expected to remain steady at 3.4%, consensus forecasts suggest around 25,000 jobs may have been added to the economy in December. That level of growth would suggest the jobs market remains hot, with no signs as yet that rising interest rates have dampened hiring sentiment.Another key indicator to watch closely this week is the Westpac Consumer Confidence Index, which acts as a gauge for local consumer sentiment. 

Unlike the jobs market, consumer sentiment has been weak over recent months, and estimates suggest the picture has deteriorated further in January as borrowers prepare for a sharp increase in home loan repayments and deal with elevated inflation.

Overseas, the US Census Bureau will publish retail sales for December on Wednesday, local time. The data will cover the key holiday season. The Federal Reserve ultra-aggressive rate hike strategy is likely to have dampened consumer spending. Projections suggest retail sales went backwards 0.5% last month, which follows a 0.6% decline back in November. Meanwhile, the US Bureau of Labor Statistics will issue the latest Producer Price Index (PPI), also on Wednesday, US-time. 

This gauge tracks inflation for manufacturers and wholesalers of goods. While producers are likely still dealing with an inflationary environment, price growth may have decelerated in December to 7%, compared with 7.4% the month prior, and 11.7% back in March, 2022.

The data for core prices could make for a slightly better story, with annual price growth predicted to dip below 6% for the first time since the middle of 2021.

There will also be other updates this week covering existing home sales, housing starts, and building permits.

Stocks on watch

Making a splash in the US on Friday was emerging lithium-boron producer Ioneer (ASX: INR). The company announced that it secured a conditional commitment from the US Department of Energy for a loan up to US$700 million. The loan is contingent on the company receiving all the necessary permits for its Rhyolite Ridge Project in Nevada. 

Recently, the company advised the market that it is in the final stage of the permitting process with the relevant authorities, albeit it has faced some opposition from the Center for Biological Diversity.  The loan is to fund the company on-site lithium processing facility, with the project expected to provide lithium for 400,000 electric vehicles once fully operational. Ioneer shares soared by over 30% during trading on the US over-the-counter (OTC) market.

The price of gold continued its ascent heading into the weekend, gaining another 1.2% during Friday offshore trading session. That means the precious metal enters the new trading week at approximately US$1,920 per ounce, its highest level since late April, 2022. 

Softer inflation data in the US weighed on the greenback as observers believe the Federal Reserve is set to slow, and then potentially reverse its rate hike campaign this year. Gold stocks to watch this week include Northern Star Resources (ASX: NST), Evolution Mining (ASX: EVN), and Silver Lake Resources (ASX: SLR).Iron ore is another sector bubbling with momentum at the moment. The commodity reached US$123 per tonne on Friday, with traders betting on renewed demand for commodities out of China. That has provided a strong tailwind for some of the market biggest names, with BHP (ASX: BHP) setting the equivalent of an all-time high, and Fortescue Metals Group (ASX: FMG) recording a 52-week high.Look out for the latest update on the proposed $18.4 billion takeover of Origin Energy (ASX: ORG). Over recent weeks, the company suitors, Brookfield and EIG Partners, have been conducting exclusive due diligence on the deal. The period for that review ends today, with information over the weekend suggesting the parties may request further time.

Since the federal government announced its price cap policy, some analysts have cast doubt over the deal, or at least the price at which the consortium might be prepared to follow through with its takeover. The duo intend to split Origin assets, with EIG affiliate gaining exposure to Origin LNG export operations, while Brookfield would acquire the core energy division.

There are more earnings reports on the way from the US over the coming days, despite the market being closed on Monday. Names like Morgan Stanley (NYSE: MS) and Goldman Sachs (NYSE: GS) headline the report card, picking up from where the rest of their peers reported late last week. Other banks signalled concerns about net interest income in the face of an uncertain economic outlook, including signs of slippage, and expectations that demand for loans will slow.Outside the financial sector, earnings season continues with reports from United Airlines (NASDAQ: UAL), American Airlines (NASDAQ: AAL), Procter & Gamble (NYSE: PG), and Netflix (NASDAQ: NFLX).