Australian shares to track Wall St rally after Fed decision

The news: The Australian sharemarket is set to track sharp gains on Wall Street after the US Federal Reserve flagged the end of its tightening cycle and struck a dovish tone for the year ahead.

The numbers: The Dow Jones index was up 1.02%, the broader S&P 500 gained 1.11%, while the tech-heavy Nasdaq had added 1.15% after the US central bank left rates unchanged. In the local market, ASX 200 futures were trading 62 points or 0.85% higher at 7339 points at 7:00am AEDT on Thursday.

The context: All three major US stock indexes are on track to reach fresh closing highs for the year after the Fed acknowledged that inflation has eased and implied that the rate tightening cycle might be over, hinting that lower borrowing costs could be on the cards in 2024. Earlier, data showed US producer prices were unchanged in November, further evidence that inflation continues to edge lower toward the Fed's average annual 2% target.

What they said: "The Fed delivered an early holiday present this year," Greg Bassuk, CEO at AXS Investments in New York told Reuters. "Investors are embracing change in Fed sentiment toward a more dovish stance, it really underscores the trade that investors have been making over the last few weeks; that rates are set to decline in the coming year."