Australian shares set to drop after profit taking on Wall Street

The news: The Australian sharemarket is expected to go backwards following a record high last week after a choppy session on Wall Street on Friday that saw investors book profits from the recent rally.

The numbers: The Dow Jones index ended 0.18% lower, the broader S&P 500 lost 0.65% while the tech-heavy Nasdaq dropped 1.16%. In the local market, ASX 200 futures were down 47 points or 0.6% at 7811 points at 7:00am AEDT on Monday.

The context: US stocks ended lower and Treasury yields dipped as data reinforced the conviction that the Federal Reserve will begin easing by mid-year. A mixed report from the Labor Department showed US jobs growth accelerated in February, even as the unemployment rate jumped and wage gains moderated, keeping on the table an anticipated interest rate cut in June. Attention will now turn to the US Consumer Price Index inflation report on Wednesday AEDT.

Local traders are looking overseas for market direction ahead of the Reserve Bank’s March policy meeting next week.