The Australian share market is poised to open lower on Thursday, after Wall Street fell on confirmation that the Federal Reserve is likely to hike interest rates as early as March.
Key points:
- The ASX is set to drop after Wall Street lost ground
- The US Federal Reserve could raise rates as early as March
- The international oil benchmark, topped $US90 on Wednesday for the first time in more than seven years.
ASX futures were down 0.1 per cent, to 6,951, by 8am AEDT.
The Australian dollar fell to a seven-week low, down 0.6 per cent, to 71.08 US cents.
It was another rocky day of trading on Wall Street as investors reacted to the US central bank’s rate-setting committee’s announcement that the cheap money flowing through the economy could be coming to an end sooner than expected.
The Dow Jones index lost 0.4 per cent, to 34,168. The benchmark S&P 500 slid 0.2 per cent, to 4,349, and the Nasdaq Composite closed little changed at 13,542.
Energy and banks propped up the benchmark index.
Meanwhile, strong quarterly earnings results boosted companies such as Microsoft, which gained 2 per cent.
Boeing lost 4.7 per cent after reporting mixed results.
US rate rise could come early
The Federal Reserve has signalled that it is likely to raise US interest rates in March in a bid to curb inflation.
An increase would be a key step in reversing pandemic-era, low-rate policies that have fuelled hiring and growth but have also escalated inflation.
“With inflation well above 2 per cent, and a strong labour market, the committee expects it will soon be appropriate to raise the target range for the federal funds rate,” the Fed’s rate-setting Federal Open Market Committee said in a statement after the end of a two-day policy meeting.
Inflation in the US rose 7 per cent in 2021, the highest jump since 1982.
Moves by the Federal Reserve will add to pressure on the Reserve Bank of Australia to raise rates domestically this year.
Several major banks expect the RBA to hike rates in August, while some analysts have said a move could come as early as May.
Commodities rise
Brent crude, a key international oil benchmark, topped $US90 on Wednesday for the first time in more than seven years.
At just before 8am AEDT, Brent was up 1.1 per cent, to $US89.25 per barrel, while West Texas crude dropped 1.2 per cent, to $US86.68 per barrel.
Spot gold was down 1.8 per cent, to $US1,818.00.
Iron ore gained 0.2 per cent, to $US138.10 per tonne.
European stocks closed higher as investors followed the US market’s earlier gains, with indices closed before the late Wall Street sell down.
The pan-European STOXX 600 index closed 1.7 per cent higher, Germany’s DAX rose 2.2 per cent, while Britain’s FTSE gained 1.3 per cent.
