Australian share prices are expected track their United States counterparts lower on Wednesday and erase the gains of the previous day as investors await a U.S. interest rate cut.
Futures market trading indicates the value of the 200 largest stocks on the Australian Securities Exchange (ASX) should fall by about 0.5% when trading begins at 10 am AEST (12 am GMT Tuesday).
The S&P/ASX 200 share price index September contract was quoted 40 points above the prior settlement at 8,832, at the time of writing.
“The market is expected to wipe out all of yesterday’s gains,” Chief CommSec Economist Ryan Felsman said.
He said investors were cautious ahead of August labour force figures, due to be published by the Australian Bureau of Statistics on Thursday, which CommSec expected to show unemployment steady.
“That's likely to temper any optimism from stronger commodity prices that could otherwise lift resources stocks,” Felsman said, referring to oil, gold and iron ore.
The direction was set on Wall Street, where the benchmarks eased on Tuesday (Wednesday AEST) amid profit taking in choppy trading on Tuesday as investors became cautious ahead of an expected rate cut from the Federal Reserve Board on Wednesday (Thursday AEST).
The Dow Jones Industrial Average dropped 0.3%, the S&P 500 eased 0.1% and the Nasdaq Composite lost 0.1%.
Although data issued on Tuesday showed U.S. retail sales increased more than expected in August, the market is factoring in a 25 basis point reduction by the Federal Open Market Committee (FOMC).
"Any kind of resilient economic data will only reaffirm the hawks on the FOMC ... and could give a little bit of fuel for (Fed Chair Jerome) Powell to come out as slightly more hawkish than the market is hoping for," Baird Private Wealth Management Investment Strategist Ross Mayfield was quoted saying in a Reuters story.
The Australian market had risen on Tuesday with the S&P/ASX 200 Index adding 0.3% to 8,877.7 points.
In fixed interest markets, yields on Australian Government bonds rose, with two-year rates putting on 0.15% to 3.372% and 10-year rates adding 0.14% to 4.223%.
