Australian stocks set to track Wall St drop after Fed meeting

The news: The Australian sharemarket is set to track a fall in major US indices after the Federal Reserve held rates steady but raised prospects of another hike this year.

The numbers: The Dow Jones index ended 0.22% lower, while the broader S&P 500 dropped 0.94% and the tech-heavy Nasdaq slumped 1.53%. In the local market, ASX 200 futures reversed earlier gains to trade 20 points or 0.28% lower at 7151 points at 0700 AEST on Thursday.

The context: While the US Federal Reserve held key interest rates unchanged in the 5.25%-5.5% range as widely expected, its Summary Economic Projections (SEP) and dot plot indicated an additional 25 basis point rate hike this year, and a slower shift to rate cuts next year. This has raised concerns for investors worried about rates staying ‘higher for longer’, and prompted declines in interest rate sensitive heavyweights including Apple, Microsoft and Nvidia.