Australian shares to start lower after Wall Street dips

The news: The Australian sharemarket is set to drop in early trading, taking cues from a decline on Wall Street amid dampened hopes for early rate cuts by the Federal Reserve.

The numbers: The Dow Jones index is trading 0.19% lower, the broader S&P 500 slipped 0.25% while the tech-heavy Nasdaq was down 0.21%. In the local market, ASX 200 futures were trading 35 points or 0.47% lower at 7453 points at 7:30am AEDT on Friday.

The context: The major US stock indices fell after news of hotter-than-expected inflation and signs of labour market strength dampened hopes for early interest rate cuts by the Fed. Consumer prices rose more than expected in December, with Americans paying more for shelter and healthcare. A separate report showed the number of people filing new claims for unemployment benefits unexpectedly fell last week to 202,000. Recent comments from some Fed officials have also pushed back on potential easing, leading investors to scale back expectations for the timing and size of any rate cuts from the US central bank this year.