The Australian sharemarket is set to extend losses on Friday after oil prices spiked higher, global bond yields soared, and the probability of a 25-basis-point interest rate increase by the United States Federal Reserve topped 70%.
ASX 200 futures were down 78 points or 0.9% at 8,733.
Among U.S. benchmarks, the Dow Jones Industrial Average declined 0.6%, while the S&P 500 fell 0.6% and the Nasdaq declined 0.7%.
Oil extended its advance as the day progressed, pushing towards $US109 a barrel.
The yield on the U.S. 10-year Treasury note ended the trading day 12 basis points higher at 4.96%. The UK equivalent rose 11 basis points to 5.37%, France's gained 10 basis points to 4.44% and Germany's added eight basis points to 3.50%.
"Yields are going up at the short end of the curve because the Fed is probably going to hike in the next couple months. Yields are going up at the long end of the curve because of debt and deficit issues, and sticky inflation," Ross Mayfield, an investment strategy analyst at Baird in Louisville, Kentucky was quoted as saying in a Reuters story.
"Higher yields are a negative for the equity market. They lower valuations and they make it more expensive to operate a business, and more expensive for consumers to exist in the world."
The Australian sharemarket retreated on Thursday, with the S&P/ASX 200 Index closing down 92.0 points or 1.0% at 8,819.4, with 10 of the 11 sectors finishing in the red.
On the local bond markets, 10-year rates were up 1.7% to 5.365%, while two-year rates rose 0.3% to 5.039%, with both touching their highest levels since May 2011.
