Australian shares set to drop after weak Wall Street session

The news: The Australian sharemarket is set to drop, tracking a weak trading day on Wall Street as investor sentiment sours with hopes of early rate cuts fading further.

The numbers: The Dow Jones index ended just 0.06% higher while the broader S&P 500 lost 0.24% to mark its fifth straight session of declines and the tech-heavy Nasdaq dropped 0.52%. In the local market, ASX 200 futures were down 55 points or 0.72% at 7612 points at 0700 AEST on Friday.

The context: Two of the three major US indices slipped again after economic data and comments from Federal Reserve officials suggested the central bank is unlikely to cut interest rates in the near future. The US labour market remained resilient with weekly initial unemployment claims unchanged while a gauge of manufacturing in the mid-Atlantic region rose to a two-year high. Comments from Fed officials reiterated the lack of urgency to lower rates, as New York Federal Reserve President John Williams cited the robust economy while Atlanta Federal Reserve President Raphael Bostic said he is "comfortable being patient" on rates. Equities have struggled recently following a five-month rally that started in part due to expectations the Fed was likely to cut interest rates in the first half of the year.