Australian shares are poised to open higher on Wednesday after lower than forecast United States inflation data and strong earnings from major U.S. banks drove gains in New York.
By 10:20 am AEST (12:20 am GMT), the ASX 200 index was trading 0.7% higher at 8,869.6.
The S&P 500 and Nasdaq Composite indexes closed higher overnight on Wall Street amid improving investor sentiment and despite ongoing geopolitical tensions in the Middle East.
This followed the release of data which showed inflation slowed more than economists had expected in June, easing concerns the U.S. Federal Reserve may need to tighten monetary policy further in the near term.
The S&P 500 rose 0.4%, the Nasdaq Composite put on 0.9%, and the Dow Jones Industrial Average managed just a 0.02% rise on Tuesday (Wednesday AEST).
"The inflation report seems to have weakened the argument that the Fed is going to raise rates," Horizon Investment Services Chief Executive Chuck Carlson was quoted saying in this Reuters story.
The U.S. second-quarter earnings season began with five big U.S. banks reporting solid results, buoyed by trading strength and dealmaking.
Shares in Goldman Sachs, JPMorgan Chase and Bank of America firmed although Citigroup and Wells Fargo weakened.
The Australian sharemarket had ended flat at 8,808.5 points on Tuesday as seven of the 11 sectors finished in the black.
In fixed interest markets, the Australian Government bond yield curve steepened with two year rates dropping 0.72% to 4.522% and 10-year rates rising 0.12% to 4.895% at the time of writing.
