Australian shares to start lower after shaky session in Europe

The news: The Australian sharemarket is poised to start lower, tracking losses in European markets after Germany’s economic woes dampened investor sentiment.

The numbers: The pan European Stoxx 600 ended 0.54% lower while the UK's FTSE 100 lost 0.39% on Monday. US markets were closed overnight for Martin Luther King Day. In the local market, ASX 200 futures were trading 21 points or 0.28% lower at 7445 points at 7:00am AEDT on Tuesday.

The context: European shares ended lower with government bond yields rising and warnings against premature rate cuts from the European Central Bank, after data showed Germany's economy shrank 0.3% sequentially in 2023, its first decline since 2020. Traders are still pricing in around 150 basis points of rate cuts this year, with a more than 20% chance of the first cut coming as soon as March. Also weighing on sentiment, China's central bank left the medium-term policy rate unchanged, defying market expectations for a cut.