Australian shares to rise after Wall Street gains

The news: The Australian sharemarket is set to track gains on Wall Street as fresh data reinforced expectations for gradual rate cuts by the US Federal Reserve next week.

The numbers: The Dow Jones index ended 0.58% higher, while the broader S&P 500 gained 0.75% and the tech-heavy Nasdaq added 1.0%. In the local market, ASX 200 futures were up 45 points or 0.55% at 8,115 points at 7am AEST on Friday.

The context: US stocks closed higher after the latest inflation data bolstered hopes for a 25 basis point rate cut by the central bank. The producer price index (PPI) for final demand rose 0.2% in August, compared with estimates for 0.1% growth. The core number, which strips out volatile food and energy prices, rose 0.3%, higher than the 0.2% forecast. Separately, initial claims for state unemployment benefits stood at 230,000 for the week ended 7 September, in line with estimates.

A string of weakening employment and economic growth data in the past few weeks had fuelled some bets on a larger-than-usual 50-bps interest rate cut by the Fed, but these have faded after this week’s inflation reports.