Australian shares to open higher after Wall Street rally
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The news: The Australian sharemarket is set to start higher after US stocks rallied on Friday as dovish remarks from Federal Reserve Chair Jerome Powell cemented expectations the US central bank will cut its key policy rate in September.
The numbers: The Dow Jones index ended 1.14% higher, while the broader S&P 500 gained 1.15% and the tech-heavy Nasdaq advanced 1.47%. In the local market, ASX 200 futures were up 41 points or 0.51% at 8,025 points at 7am AEST on Monday.
The context: All three major US stock indices jumped after the release of Powell's prepared remarks on Friday, with mega caps Nvidia, Apple and Tesla providing the most heft. In highly anticipated comments before the Jackson Hole Economic Symposium, Powell said "the time has come" to lower the Fed funds target rate, and that the upside risks of inflation had diminished.
"We do not see or welcome further weakening in labor market conditions," Powell added in a speech that appeared to all but guarantee a rate cut at next month's policy meeting, which would be the first such cut in over four years.
This week, the data-dependent Fed will have a raft of economic indicators to consider ahead of its September rate decision, including the Commerce Department's revised second-quarter GDP and its broad-ranging Personal Consumption Expenditures (PCE) report, which includes the Fed's preferred inflation yardstick, the PCE price index.
In the local market, traders will be focused on earnings reports from insurer NIB, Bendigo and Adelaide Bank, and Pilbara Minerals among others.
The source: Reuters
