Upbeat economic data from the world’s largest economy and anticipation of its first interest rate cut in four years led to a rally on Wall Street, with the ASX also posting strong gains.

US stocks rose on Friday on expectations of monetary easing, with the S&P 500 rising to 5,626 by the close.

Fueled by positive momentum, the Australian share market jumped to 8144.7 before midday on Monday, approaching an intraday high of 8148.7 reached on 1 August.

Seven of the 11 sectors posted gains, with financials and technology stocks leading the way. However, the rally appeared to plateau and the ASX closed at 8,121.60 on 16 September.

Speaking to InvestorDaily after the ASX's strong performance on Monday, Diana Mussina, deputy chief economist at AMP, said the Australian share market had been supported by better-than-expected earnings and market speculation about potential interest rate cuts at home , as well as in the world's largest economy.

"The Australian share market is performing similarly to the US, actually outperforming over the past few weeks and riding high since the last reporting season and following this drop in volatility [in August]Musina said.

"I think some of it definitely has to do with expectations of interest rate cuts." The market is pricing in a cut from the Reserve Bank for the end of this year, despite the fact that the Reserve Bank is not even talking about cutting interest rates – they are pushing back on market pricing for rate cuts, especially towards the end of this year.

"So it's probably a slightly better earnings season than what we feared, pricing in the rate cut and what's going on in the US."

The US Federal Reserve is expected to cut interest rates by 50 basis points when it meets this week on September 17-18. It will be the US central bank's first meeting since the Jackson Hole symposium in August, where Chairman Jerome Powell signaled that "the time has come" to ease monetary policy.

While markets are pricing in a 50 basis point cut, Muzina believes a 25 basis point cut is more likely given the bigger macroeconomic picture. In fact, Mussina believes a 50 basis point rate cut could risk reigniting inflation by boosting consumer spending and demand, which could lead to higher prices.

At home, however, the jury is still out on when the RBA will begin an easing cycle, although markets expect it to be this year.

Given the still-challenging economic situation in Australia, especially after the recent troubling GDP print, Muzina called for maintaining perspective on where the market is expected to go next.

“The Australian share market is up about 7 per cent year to date, while the US share market is much stronger than that. It's up 18 percent year-to-date, so we're talking about more than double the performance,” she said.

"So yes, it could be a record high for Australia, but you have to keep things in context and in terms of how well it's performing and how the underlying economy is performing."