Australian shares are set to open slightly lower on Friday, following a modest decline on Wall Street after September’s inflation report came in slightly higher than anticipated, while weekly jobless claims hit their highest level in a year.
ASX futures dropped 3 points or 0.04% as of 7am AEDT, indicating a weaker start for the local market.
Overnight, all three major US indices posted losses. The Dow Jones Industrial Average slipped by 0.1%, the S&P 500 declined 0.2%, and the Nasdaq fell 0.05%.
The softer performance followed the release of U.S. economic data that could challenge the Federal Reserve’s recent decision to lower interest rates.
After the Federal Reserve cut rates by a larger-than-expected 50 basis points last month, the latest inflation figures raised questions about the trajectory of future rate reductions.
Despite the higher inflation reading, market expectations for a rate cut in November remain strong. The CME’s FedWatch tool showed an 82.9% probability of a 25 basis point reduction at the Fed’s next meeting, while the likelihood of holding rates steady rose slightly to 17.1%.
On the bond markets, 10-year and 2-year rates were at 4.233% and 3.837%, respectively.
