Australian shares set to drop after shaky Wall Street session
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The news: The Australian sharemarket is set to open lower after a volatile session on Wall Street that saw early gains fade away a day ahead of the US Federal Reserve’s rate decision.
The numbers: The Dow Jones index ended 0.04% lower despite hitting a fresh intraday high, while the broader S&P 500 eked out a 0.03% gain and the tech-heavy Nasdaq added 0.20%. In the local market, ASX 200 futures were down 39 points or 0.48% to 8,111 points at 7am AEST on Wednesday.
The context: US stocks closed nearly unchanged, giving up earlier gains as nervous investors braced for the first Federal Reserve rate cut in 4-1/2 years.
Earlier, the latest report from the US Commerce Department showed retail sales rose unexpectedly in August, after a decline in auto dealership receipts was offset by strength in online purchases, suggesting the economy was on solid footing through most of the third quarter.
Markets are pricing in a 65% chance the Fed will cut borrowing costs by 50 basis points at the conclusion of its two-day meeting later on Wednesday (Thursday AEST), according to the CME's FedWatch Tool, although market expectations on the cut's size have been volatile in recent days.
The source: Reuters
