The Australian share market is expected to open a new day and month lower on Wednesday despite positive signals from the United States overnight.
Chief CommSec Economist Ryan Felsman said mining and energy stocks were likely to drag the market lower, a day after the Reserve Bank of Australia (RBA) adopted a hawkish tone about inflation, which tempered hopes of an imminent interest rate cut.
He said lithium, copper, and iron ore producers could be under pressure, but gold miners could be the exception to mining and energy sector weakness due to strength in the precious metal price overnight.
The Australian Securities Exchange (ASX) should start about 0.1% below the previous close at 10:00 am AEST (12:00 am GMT) with future trading putting the S&P/ASX 200 share price index December contract 11 points under the prior settlement at 8,862.
The S&P/ASX 200 had fallen 1.4% in September, the worst monthly performance since March, which limited its September quarter advance to 3.6%, lagging the U.S. market, which posted its best September quarter since 2020 and best September since 2010.
The difference is explained by expectations of more interest rate cuts in the United States than in Australia, where the chances of a reduction in November have been put at 40%.
Wall Street’s major indexes closed up on Tuesday to consolidate quarterly and monthly gains despite the prospect of a U.S. government shutdown.
The Dow Jones Industrial Average added 0.2%, the S&P 500 rose 0.4% and the Nasdaq Composite put on 0.3%.
"Investors are clinging to the positives," 248 Ventures Chief Strategist Lindsey Bell was quoted in a Reuters story as saying.
The Australian market had ended a little lower on Tuesday after the RBA left rates unchanged, with the S&P/ASX 200 slipping 0.2% to 8,848.8 points.
In fixed interest markets, the Australian Government bond yield curve steepened as two-year rates fell 0.11% to 3.533% and 10-year rates rose 0.07% to 4.337%.
