Australian shares set to fall after Wall Street tumbles
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The news: The Australian sharemarket is set to fall in early trade after major indices on Wall Street tumbled on the back of unfavourable economic data.
The numbers: The Dow Jones index ended 1.47% lower, while the broader S&P 500 fell 1.56% and the tech-heavy Nasdaq lost 2.0%. In the local market, ASX 200 futures were down 92 points or 1.2% to 7593 points at 7:00am AEST on Wednesday.
The context: US stocks ended lower as markets weighed economic data showing rising labour costs and deteriorating consumer confidence on the day of a key Federal Reserve policy meeting to decide the direction of interest rates.
Data showed US labour costs rose by a more-than-expected 1.2% last quarter, indicating an uptick in wage pressures, while US consumer confidence dropped to its lowest level in more than 1-1/2 years in April.
Money markets are pricing in just about 31 basis points of rate cuts this year, down from about 150 bps estimated at the start of 2024.
What they said: "We're still in an environment where the knee-jerk reaction is to extrapolate any warmer data into firmer inflation and more hawkish reaction from the Fed," Garrett Melson, portfolio strategist at Natixis Investment Managers in Boston told Reuters.
The source: Reuters
