Expectations of lower interest rates in the United States that boosted Wall Street overnight have failed to sway futures traders who have priced in a lower start by Australian shares on Tuesday.
The Australian Securities Exchange’s (ASX) main index is expected to extend losses when trading starts at 10 am AEST (12 am GMT Monday).
The S&P/ASX 200 share price index (SPI) September contract was trading 31 points (0.35%) under the previous settlement at 8,326 points, at the time of writing.
This is despite a rally in U.S. stocks on Monday (Tuesday AEST), which pushed the Nasdaq Composite index to a new high, sparked at least partly by investors expecting the Federal Reserve will soon cut interest rates to support the economy.
The Dow Jones Industrial added 0.3%, the S&P 500 put on 0.2% and the Nasdaq gained 0.5%.
The market has priced in a reduction of at least 25 basis points on 17 September, but more cuts are expected to follow this year due to concerns about the state of the world’s largest economy.
“The market is greedy. It's already discounted 25 basis points. Now, if people are buying because they expect 50, well, that's not going to happen," Longbow Asset Management Chief Executive Officer Jake Dollarhide was quoted as saying in a Reuters article.
A lower start would add to losses from Monday when the S&P/ASX 200 fell 0.2% to 8,849.6 points.
In Australia, business and consumer confidence surveys are due out, while the shares expected to be down more than others are BlueScope Steel (ASX: BSL) and CSL (ASX: CSL) as they trade ex-dividend today.
In fixed interest markets, Australian Government bond yields rose by 0.18% to 3.361% on two-year paper and 0.02% to 4.252% on 10-year paper.
