Australia

Australian shares are set to gain on open following a continued rally on Wall Street as key inflation data shows some signs of cooling and commodity prices fall.

ASX futures were up 45 points or 0.64% at 7002 as of 7:00am on Tuesday, pointing to a gain at the open.

US stocks rose Monday, ahead of key inflation data that is expected to show further cooling of consumer prices.

The S&P 500 gained 1.1% after it closed higher for the week on Friday. The Dow Jones Industrial Average added 0.7% while the technology-heavy Nasdaq Composite climbed 1.3%. All three indexes logged their fourth consecutive trading day of advances.

Indexes have charted a steady rise in recent sessions as concerns about large interest-rate hikes have been alleviated. Tumbling commodity prices have lifted hopes that the worst of inflation has passed. Meanwhile, the labour market has remained a key source of economic strength. Gauges of business activity have been stronger than expected.

"The biggest thing driving markets now is investor optimism that inflation is falling," said Michael Arone, chief investment strategist for the US ETF business at State Street Global Advisors. "We're in that period where earnings season is over, and it does become all about the biggest story of the year: the Fed and what is the end-target federal funds rate."

In commodity markets, Brent crude oil gained 1.58% to $US94.31 a barrel, gold edged up 0.48% to US$1,725.10.

In local bond markets, the yield on Australian 2 Year government bonds rose to 2.96% while the 10 Year rose to 3.63%. Overseas, the yield on 2 Year US Treasury notes rose to 3.57% and the yield on the 10 Year US Treasury notes rose to 3.36%.

The Australian dollar hit 68.81 US cents up from the previous close of 68.42. The Wall Street Journal Dollar Index, which tracks the US dollar against 16 other currencies edged down to 100.31.

Asia

Shanghai and Hong Kong exchanges were closed on Monday for a public holiday.

Japanese stocks end higher, led by gains in railway and airline stocks, following news the government is considering easing border restrictions to attract foreign visitors. West Japan Railway gains 3.4% and ANA Holdings climbs 2.5%. The Nikkei Stock Average rises 1.2% to 28542.11. Investors are focusing on the war in Ukraine and its implications for the trade of crude oil and other commodities. USD/JPY is at 143.42, compared with 142.58 late Friday in New York. The 10-year Japanese government yield stays flat at 0.245%.

Europe

European stocks rose on Monday as markets eyed reports of Ukrainian military gains against Russia in northeastern Ukraine. The Pan-European Stoxx Europe 600 and French CAC 40 advanced more than 1% and Germany's DAX jumped 2%.

The breakthrough in Ukraine shifts the balance of risks for markets, with some net improvement overall, but increased potential for extreme positive and negative outcomes, Evercore says. "On one hand, the rapid Ukrainian advance creates some possibility that Russia concludes its expansive war aims are unattainable," Evercore analysts write. "On the other, Putin may be more dangerous than ever with his back against the wall.

The FTSE 100 closed up 1.7% as falling natural gas prices in Europe and hopes of inflation in the U.S. have helped maintain and build on last week's rebound, CMC Markets UK analyst Michael Hewson says in a note. Furthermore, the shortage of earnings news has made it easier for the index and others to bounce, IG analyst Chris Beauchamp says in a note. Still, the Federal Reserve's next rate decision will soon loom large, Beauchamp notes. "The broader outlook still remains tough, and it makes sense to expect indices to reverse course in the weeks to come," Beauchamp says. Kingfisher was the day's biggest riser closing up 6.1%, followed by Howden Joinery and Tesco, both up 5.5%.

North America

US stocks rose Monday, ahead of key inflation data that is expected to show further cooling of consumer prices.

The S&P 500 gained 1.1% after it closed higher for the week on Friday. The Dow Jones Industrial Average added 0.7% while the technology-heavy Nasdaq Composite climbed 1.3%. All three indexes logged their fourth consecutive trading day of advances.

Indexes have charted a steady rise in recent sessions as concerns about large interest-rate hikes have been alleviated. Tumbling commodity prices have lifted hopes that the worst of inflation has passed. Meanwhile, the labour market has remained a key source of economic strength. Gauges of business activity have been stronger than expected.

"The biggest thing driving markets now is investor optimism that inflation is falling," said Michael Arone, chief investment strategist for the US ETF business at State Street Global Advisors. "We're in that period where earnings season is over, and it does become all about the biggest story of the year: the Fed and what is the end-target federal funds rate."

US consumer-price inflation data, due Tuesday, will likely dominate investors' focus this week.

The data is expected to show August was the second month of cooling inflation pressures. The figures will help Federal Reserve officials gauge how far their fight against soaring prices has come and how much further they need to lift interest rates. Fed officials have an interest-rate meeting next week.

"If inflation moderates quicker than expected, I think the Fed can get more comfortable that their job might be closer to being done than they originally thought," said Stephanie Lang, chief investment officer at Homrich Berg.

Inflation has likely peaked, she added, but markets are unlikely to push much higher until the Fed begins to moderate its tightening campaign. "What the market is pricing in right now is a soft landing, which I think is pretty optimistic," she said.

Despite some signs of inflation decelerating, investors largely expect Fed officials to continue tightening for some months to be sure price pressures have abated. Many investors expect the Fed to raise interest rates by another 0.75 percentage point next week.

"The Federal Reserve will require at least three months of reassuring inflation data -- along with evidence of a cooling labour market -- before considering softening its tone," said Mark Haefele, chief investment officer at UBS Global Wealth Management, in a note.

Bristol-Myers Squibb jumped 3.2% after the US Food and Drug Administration approved the drugmaker's psoriasis treatment, Sotyktu.

Gilead Sciences gained 4.2% after the company said it settled a patent case related to its HIV therapies.

Walt Disney rose 0.9%. Activist investor Dan Loeb signalled Sunday he is backing off his push to persuade the company to spin off ESPN.

Twitter fell 1.7% after the company's lawyers said Twitter intends to enforce its purchase agreement with Elon Musk. Mr. Musk's legal team on Friday cited a whistleblower payment as a new reason to drop the takeover.