Australian shares to open lower despite Wall Street gains

The news: The Australian sharemarket is set to open lower, with local investors staying cautious despite a partial recovery on Wall Street a day after a dramatic sell-off.

The numbers: The Dow Jones index ended 0.76% higher, while the broader S&P 500 gained 1.04% and the tech-heavy Nasdaq advanced 1.03%. In the local market, ASX 200 futures were down 19 points or 0.25% to 7,615 points at 7am AEST on Wednesday.

The context: US stocks rose as investors jumped back into the market, with all major S&P 500 sectors ending higher. US central bank policymakers have pushed back against the idea that weaker-than-expected July jobs data means the economy is headed for a recession, but have also warned that the Federal Reserve will need to cut interest rates to avoid such an outcome.

Traders are pricing in a 75% chance the Fed will cut rates by 50 basis points at its next policy meeting in September, and a 25% chance of a 25 basis point reduction, the CME Group's FedWatch Tool showed. The next big Fed event is Chair Jerome Powell's speech at the Jackson Hole, Wyoming, on 22-24 August.