Australian shares to rise after steady lift on Wall Street

The news: The Australian sharemarket is set for gains amid light trading after the Christmas break, tracking steady gains on Wall Street where stocks continued to rise on hopes of an early rate cut next year.

The numbers: The Dow Jones index was trading 0.41% higher, with the broader S&P 500 up 0.40%, and the tech-heavy Nasdaq adding 0.44%.

The context: All three major US stock indexes were in positive territory, extending an eight-week rally in the year's final week on expectations that the Federal Reserve will begin cutting interest rates as soon as March. Those hopes were bolstered after data on Friday indicated US inflation is easing down closer to the Fed's average annual 2% target. Markets are assuming a 72.7% likelihood of a 25 basis point reduction in the Fed funds target rate as soon as March, according to CME's FedWatch tool.