Australian shares to start week on a cautious note

The news: The Australian sharemarket is poised to open lower, tracking a weaker close on Wall Street on Friday and with investors cautious ahead of monthly inflation data later this week.

The numbers: The Dow Jones index edged up 0.04% on Friday, while the broader S&P 500 lost 0.16% and the tech-heavy Nasdaq slipped 0.18%. In the local market, ASX 200 futures were down 16 points or 0.21% to 7,765 points at 7:00am AEST on Monday.

The context: The S&P 500 and Nasdaq closed lower on Friday, dragged down by tech stocks as Nvidia fell for a second straight session. Wall Street's bumper gains since the final leg of 2023 have been primarily driven by the likes of Nvidia and a handful of other heavily weighted stocks linked to artificial intelligence. Analysts, however, have raised concerns whether the strong increase in their valuations is sustainable.

It came even as data showed US business activity reached a 26-month high in June amid a rebound in employment, while easing price pressures suggested the recent inflation slowdown may continue. Money markets are still pricing in a 58% chance of a 25-basis point rate cut in September, and continue to expect around two rate cuts this year.