Wall St drop, Middle East fears to weigh on Australian shares

The news: The Australian sharemarket is set to start sharply lower, tracking a weak close for Wall Street on Friday and amid fears the Middle East conflict could spread in the region.

The numbers: Major US indices ended mixed on Friday, with the Dow Jones index ending 1.12% lower and the broader S&P 500 losing 0.48%. However, sharp gains for Intel and Amazon.com helped the tech-heavy Nasdaq close 0.38% higher. In the local market, ASX 200 futures were trading 67 points or 0.98% lower at 6772 points at 0700 AEDT on Monday.

The context: US stocks lost momentum amid a hectic week of mixed earnings, and economic data seemed to support the "higher for longer" interest rate scenario, showing inflation gradually cooling down as expected, but consumer spending, which accounts for about 70% of the U.S. economy, posting a robust upside surprise. Meanwhile, investors fear the Israel-Hamas conflict could spiral into a regional instability after Israel expanded its ground operations in Gaza.