Australian shares set to rise after Wall Street rally
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The news: The Australian sharemarket is set to rise in early trading, tracking an overnight rally on Wall Street after a smaller-than-expected rise in US consumer inflation bolstered hopes for interest rate cuts.
The numbers: The Dow Jones index ended 0.88% higher, putting it in touching distance of the 40,000 mark. The broader S&P 500 gained 1.17% while the tech-heavy Nasdaq added 1.4%. In the local market, ASX 200 futures were up 50 points or 0.64% at 7,842 points at 7:00am AEST on Thursday.
The context: All three major US indices notched record closes after tepid US Consumer Price Index data for April fuelled optimism that inflation was easing after three months of higher-than-expected numbers.
Other data released on Wednesday showed US retail sales were unexpectedly flat in April, indicating that consumer spending was losing momentum. It led traders to raise bets that the Federal Reserve will cut its policy rate in September and December.
Stocks have rallied so far this year on better-than-expected first-quarter earnings and expectations that the Fed will be able to cool inflation without damaging growth and eventually transition to cutting interest rates.
In the local market too, traders will be focused on unemployment data for April that could have a bearing on the Reserve Bank’s outlook on interest rates.
The source: Reuters
