The Australian sharemarket opened lower on Thursday after stocks in New York fell on expectations of interest rate increases in the United States following the first Federal Reserve (Fed) policy decision under new chairman Kevin Warsh.
By 10:20 am AEST (12:20 am GMT), the ASX 200 index was trading 0.3% lower.
Traders reacted to the Fed’s more hawkish outlook, which contributed to the negative tone on Wall Street despite the fact that policymakers left rates unchanged in the range 3.50% to 3.75%.
The rate call was expected, but in a policy statement, the Fed removed previous language indicating rate cuts were likely this year, while in his first meeting as Chair, Warsh told reporters the central bank would deliver on price stability.
The major indexes on Wall Street fell by at least 1% on Wednesday (Thursday AEST) after half of the bank’s policymakers indicated they expected a rate rise later in 2026.
The Dow Jones Industrial Average fell 1%, the S&P 500 lost 1.2%, and the Nasdaq Composite shed 1.3%.
"There was clearly a hawkish tilt to the Fed's statement and Chair Warsh's comments at the press conference,” Rosenblatt Securities managing director and equity sales trader Michael James was quoted as saying in a Reuters article.
“The main takeaway, in my opinion, is the Fed's focus on the commitment to deliver price stability and the commentary about inflation.”
The expected lower start will erase the gains recorded in Australia on Wednesday when the ASX 200 rose 48.6 points, or 0.5%, to 8,966.3 on news of the United States and Iran readying to formally sign a peace deal.
On the bond markets, the Australian Government yield curve flattened as two-year rates rose 0.92% to 4.497% and 10-year rates fell 1.08% to 4.767% at the time of writing.
