Australian shares set to dip ahead of federal budget

The news: The Australian sharemarket is set to start slightly lower as investor sentiment remains cautious after a subdued session overnight on Wall Street and ahead of the federal budget later on Tuesday.

The numbers: The Dow Jones index ended 0.21% lower, while the broader S&P 500 edged down 0.02% and the tech-heavy Nasdaq gained 0.29%. In the local market, ASX 200 futures were down 8 points or 0.1% at 7,776 points at 7:00am AEST on Tuesday.

The context: US stocks took a breather after three weekly gains as investors await key inflation readings and earnings reports due this week. It prompted them to stay clear of making big bets ahead of the April consumer price index data due out on Wednesday as well as producer price index data, retail sales data, weekly jobless claims and earnings reports from big retailers all due out this week.

In the local market too, traders are focused on Tuesday evening’s budget details, including a likely budget surplus and cost-of-living relief measures, that could determine the path for interest rate cuts by the RBA.