Australian shares set to drop after Wall Street falls

The news: The Australian sharemarket is set to drop in early trading as traders take cues from Wall Street where shares fell as investors digested the minutes of the US Federal Reserve's most recent meeting.

The numbers: The Dow Jones index ended 0.51% lower, the broader S&P 500 lost 0.27% while the tech-heavy Nasdaq slipped 0.18%. In the local market, ASX 200 futures were down 74 points or 0.94% at 7,796 points at 7:00am AEST on Thursday.

The context: US stocks struggled for direction for most of the session but weakened after the minutes showed US central bank officials expect price pressures to ease slowly due to disappointment over inflation readings.

The Fed's April 30–May 1 meeting followed three straight months of data that showed sticky inflation, but before more recent reports that showed price pressures could be cooling again. Markets are pricing in a 59% chance of the Fed cutting rates by at least 25 basis points at its September meeting, down from 65.7% in the prior session, according to CME's FedWatch Tool.