Australian stocks set to drop after selloff on Wall St

The news: The Australian sharemarket is likely to start lower after major US indices posted heavy losses overnight with renewed concerns over high interest rates.

The numbers: The Dow Jones index fell 1.14% — its biggest one-day percentage drop since March, while the broader S&P 500 slid 1.47% and the tech-heavy Nasdaq lost 1.57%. In the local market, ASX 200 futures were trading 24 points or 0.34% lower at 7046 points at 0700 AEST on Wednesday.

The context: The selloff in shares comes as investors grapple with the economic fallout if interest rates stay higher for longer. All eyes are fixed on Friday's personal consumption expenditures price index for a fresh view of the inflation picture, as well as second-quarter US GDP data this week. Adding to investor anxiety was the potential of a partial US government shutdown by the weekend. In the local market, traders are focused on monthly inflation data due at 11.30 AEST on Wednesday.