Australian shares are set to open lower on Wednesday, tracking losses on Wall Street as a surge in oil prices and rising global bond yields heightened concerns that persistent inflation could lead to higher interest rates.
S&P/ASX 200 futures were down 79 points, or 0.9%, at 8,933.
Overnight in the U.S., major benchmarks finished lower. The Dow Jones Industrial Average fell 0.8%, while the S&P 500 lost 0.7% and the Nasdaq Composite dropped 1%.
Markets are now pricing in a 66.9% probability of a 25-basis-point increase in U.S. interest rates later this month, according to the CME Group FedWatch Tool.
That compares with 65.4% a day earlier and 39.6% a week ago.
"We have a very, very hawkish Fed, and they absolutely want to raise rates," Jay Hatfield, portfolio manager at InfraCap in New York was quoted as saying in a Reuters story.
"They want to demonstrate their independence from the administration."
The Australian sharemarket closed slightly lower on Tuesday as renewed strikes in the Middle East pushed oil prices above US$91 a barrel, reviving inflation concerns.
The S&P/ASX 200 Index fell 9.30 points, or 0.1%, to 9,066.7, with seven of the 11 sectors finishing lower.
Local investors will be watching fresh gross domestic product (GDP) data due at 11:30 am AEST (1:30 am GMT), which could provide further clues about the strength of the Australian economy and the outlook for interest rates.
On the bond markets, the 10-year yield rose 0.6% to 5.192%, while two-year rates fell 0.3% to 4.792%.
