Australian stocks set to drop after Wall St selloff

The news: The Australian sharemarket is set to slide after bearish sentiment over interest rates prompted a selloff in major US indices, a day after the Federal Reserve policy meeting.

The numbers: The Dow Jones index fell 1.08%, while the broader S&P 500 and the tech-heavy Nasdaq lost 1.64% and 1.82% respectively, sliding to their lowest closing levels since June. In the local market, ASX 200 futures were trading 97 points or 1.36% lower at 7013 points at 0700 AEST on Friday.

The context: A drop in interest rate-sensitive heavyweights including Amazon.com, Nvidia Corp, Apple and Alphabet dragged US indices lower, amid renewed investor concerns that the Federal Reserve's restrictive monetary policy will remain in place for longer than anticipated. On Wednesday, the US central bank left rates on hold, but revised economic projections showed interest rates will remain elevated through next year, dampening hopes for easing of policy before 2025.

What they said: "If you do have rates higher for longer, you have more strain on the system and more pressure on the economy. It gives people another chance to say that the lag time of higher rates — which we're just starting to feel — might really bite," Thomas Martin, Senior Portfolio Manager at GLOBALT, told Reuters.