Australian shares to tread water after Wall Street dips

The news: The Australian sharemarket is set to open barely changed after a lower close on Wall Street as investors grew more cautious of a widening Middle East conflict.

The numbers: The Dow Jones index ended 0.41% lower, while the broader S&P 500 lost 0.93% and the tech-heavy Nasdaq declined 1.53%. In the local market, ASX 200 futures were up just 2 points or 0.02% at 8,254 points at 7am AEST on Wednesday.

The context: US stocks ended lower after Iran launched a salvo of ballistic missiles in retaliation for Israel's campaign against its proxy allies in the region. Investors turned risk averse following the Middle East news, with CBOE's market volatility index — Wall Street's fear gauge — rising.

Investors were also cautious ahead of US jobless claims data and monthly payrolls later this week. Traders are pricing in a 38% chance that the Federal Reserve will lower interest rates by 50 basis points in November, down from 58% a week ago, CME Group's FedWatch Tool showed.