**ASX Set for a Strong Opening Amid Wall Street Gains, Rate Cut Optimism, and Nvidia Surge**
*Adapted from work by Stephen Bartholomeusz for the Australian Financial Review*
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### Summary
The Australian share market is positioned for robust gains in upcoming trading sessions, buoyed by significant rallies on Wall Street. This upswing reflects growing investor confidence in potential interest rate cuts from central banks alongside impressive earnings from major technology players such as Nvidia. Rising optimism surrounding the possibility of more accommodative monetary policy settings, especially from the US Federal Reserve, as well as advances in artificial intelligence, have further stoked global equity markets.
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### Key Influences on the ASX and Global Markets
#### 1. Wall Street Rally
– **Major indices hit record highs**:
– The S&P 500 reached fresh milestones, underpinned by surging technology stocks and improved risk sentiment.
– The Dow Jones Industrial Average and the Nasdaq Composite also advanced, following unexpectedly strong results from Nvidia.
– **Nvidia’s performance:**
– The chipmaker’s quarterly earnings and guidance have exceeded expectations, fueling optimism about future demand for artificial intelligence semiconductors.
– Nvidia’s market capitalisation briefly surpassed the $2.6 trillion mark, reflecting its pivotal role in powering the AI revolution.
– **Broader technology sector gains:**
– Other notable technology companies, such as Microsoft, Alphabet, and Meta, recorded solid gains as investors rotate funds into high-growth sectors.
– US Treasury yields moderated, supporting valuations for these growth-driven companies.
#### 2. Rate Cut Expectations
– **Shifts in central bank rhetoric:**
– Investors are closely tracking signals from the US Federal Reserve regarding the timing and scale of possible interest rate reductions in 2024.
– Federal Reserve officials, including Chair Jerome Powell, have hinted at a willingness to adjust monetary policy if inflation continues to ease.
– Recent US inflation data has come in softer than expected, fueling hopes among market participants for sooner-than-projected rate cuts.
– **Bond yields and the US dollar:**
– Yields on longer-term Treasuries have fallen to multi-month lows, signaling expectations of easier monetary policy.
– The US dollar index declined, supporting risk-sensitive assets such as equities and commodities.
#### 3. ASX Futures and Implications for Local Shares
– **SPI futures surge:**
– According to futures markets, the S&P/ASX 200 is positioned for a gain exceeding 1 percent at the next opening.
– This strength mirrors gains across global equities and is underpinned by a favorable backdrop for risk assets.
– **Sector performance:**
– Technology shares on the ASX, including ASX-listed US tech ETFs and domestic IT firms, are likely to outperform, reflecting the global trend.
– Resource stocks may also benefit, as a weaker US dollar typically lends support to commodity prices.
Read more on AUD/USD trading.