Australian shares are expected to decline at Friday's open as investors digest the Federal Reserve’s updated economic projections, which suggest fewer interest rate cuts and elevated inflation in 2025.
By 8am AEDT (9pm GMT) ASX futures were down 51 points, or 0.6% to 8,114.
On Wednesday (Thursday AEDT), the U.S. Federal Reserve reduced its anticipated rate cuts for 2025 to two, as Fed Chair Jerome Powell highlighted the ongoing risks of reinflation, which could complicate future monetary policy decisions.
Wall Street initially reacted with a sell-off to the Fed's revised stance, and Australian traders mirrored this risk-averse sentiment during Thursday’s session.
However, U.S. markets attempted a modest recovery overnight. In contrast, the outlook in Australia remains bearish.
The latest figures revealed a sharper-than-expected decline in initial jobless claims last week, while quarterly GDP data was revised higher.
Ahead in Friday's trade, market participants will be watching for Japanese inflation figures, the loan prime rate decision from the People's Bank of China, as well as local private sector credit data.
The risk-off mood in Australia signals investor caution as global markets adjust to the Fed’s revised trajectory and stronger-than-expected U.S. economic resilience.
On the bond markets, 10-year rates were steady at 4.474%, while 2-year yields lifted 0.6% to 4.006%.