ASX 200 futures point to positive start after Wall Street rallies ahead of Memorial Day closure

The local bourse could end a four-day losing streak on Monday as the ASX looks to follow gains on Wall Street ahead of a series of key economic data announcements this week.

The Australian sharemarket is expected to rally on Monday after Wall Street ended last week higher. Picture: AFP

The local sharemarket is set for a positive start to the week following solid overseas leads as investors wait for the latest outlook on Australian inflation.

Futures markets were pricing in broad gains on Monday, after Friday saw the biggest one-day fall in the past three weeks, with the S&P/ASX 200 index expected to rally 0.6 per cent at the open.

A gain on Monday would position the bourse to break a four-day losing streak and avoid its worst run in more than a month.

It comes as Wall Street swung higher on Friday ahead of the long Memorial Day weekend, even as concerns the US Federal Reserve could keep interest rates higher for longer weighed on markets.

Sentiment was boosted after the latest University of Michigan survey found that consumers were less concerned about inflation than earlier this month, bolstering hopes for a pivot to rate cuts later this year.

Brent crude, the international standard, rose 1 per cent to settle at $US77.80 per barrel after it suffered four sessions in the red over concerns that higher-for-longer interest rates in the US would hurt demand in the world’s biggest oil market. Gold, which is popular with those seeking defensive assets, was flat ahead of Monday’s session at $US2333.40.

IG market analyst Tony Sycamore said that the past week had been volatile for equities as investors digested and considered the outlook for interest rates following the release of FOMC meeting minutes last week.

“After some cooler data in the US — things were looking pretty good for a rate cut until the FOMC minutes which suggested the Fed would hike further if necessary. This saw markets go from pricing in two rate cuts to only one this year from December,” he said.

“The yoyo nature for rates is weighing on shares.”

The tech-heavy Nasdaq Composite Index finished Friday up 1.1 per cent, while the broad-based S&P 500 rose 0.7 per cent. The Dow Jones Industrial Average stabilised after tumbling 1.5 per cent on Thursday to close almost unchanged.

Nvidia’s recent blockbuster earnings helped pushed the Nasdaq Composite to new highs this week as it rose 2.6 per cent.

Mr Sycamore said that Nvidia’s results marked not only the end of earnings season in the US, but would also see shares return to the mercy of data and the bond market.

“The bond market is now back in the driver’s seat for steering equities markets, with data likely to dictate the direction now that there is due to be little in the way of news and updates for AI stocks over the coming three months.”

On the local bourse, traders will be watching this week for retail data on Monday, which is expected to show a further pullback in consumer spending. On Wednesday all eyes will be on monthly CPI data for April from the Australian Bureau of Statistics, which markets expect to ease from 3.5 per cent to 3.3 per cent.

Mr Sycamore said while traders would be paying close attention to the latest inflation print, it was unlikely to move markets considerably.