Lower expectations of interest rate cuts are set to undermine share prices in Australia, which are likely to open lower on Thursday after a mixed night in the United States.
The S&P/ASX 200 index is expected to start about 0.5% below the previous close, extending the losses sustained on Wednesday.
The December share price index contract was quoted 47 points under the prior settlement at 8,893 points, at the time of writing.
U.S. stocks closed mixed on Wednesday (Thursday AEDT) after the Federal Reserve cut interest rates by 25 basis points, but Chair Jerome Powell said another cut in December was not a foregone conclusion.
“He has basically done that in basically every press conference in which they have had a rate move, he has walked back market expectations for the next meeting," SignatureFD Chief Investment Officer Tony Welch was quoted as saying in a Reuters story.
The Dow Jones Industrial Average fell 0.2% and the S&P 500 lost 0.3 points, but the Nasdaq Composite rose 0.6% to a new record as Nvidia shares rallied.
The Australian sharemarket had closed 1% lower on Wednesday after higher-than-expected quarterly inflation reduced the chances of another rate cut this year, with the S&P/ASX 200 ending at 8,926.2 points.
Stocks to watch include Coles Group (ASX: COL), IGO (ASX: IGO), Lynas Rare Earths (ASX: LYC) and Mineral Resources (ASX: MIN), which report quarterly updates.
The yield curve steepened for Australian Government bonds as two-year rates dropped 0.36% to 3.592% and 10-year rates gained 1.17% to 4.308%, at the time of writing.
