Australian shares opened lower on Wednesday after a mixed session on Wall Street as investors took profits in technology stocks and looked toward the first Federal Reserve (Fed) interest rate decision under new chairman Kevin Warsh.
By 10:20 am AEST (12:20 am GMT), the ASX 200 index was trading 0.2% lower.
The move followed a varied performance in New York where the Dow Jones Industrial Average rose to a second successive record close while the Nasdaq Composite and broader S&P 500 pulled back from strong gains.
The Dow added 0.6% as the S&P 500 dropped 0.6% and the technology-laden Nasdaq shed 1.2%. on Tuesday (Wednesday AEST).
The S&P 500 had surged 1.65% and the Nasdaq more than 3% on Monday in what was described as a “relief rally” on news of a peace agreement between the United States and Iran.
"We had a big move yesterday in the market," Janney Montgomery Scott chief investment strategist Mark Luschini was quoted as saying in this Reuters article.
"We're just digesting some of those gains and the setup in anticipation of the Fed meeting is always a little tentative."
Attention is focused on the Fed, which is expected to leave interest rates unchanged at 3.50% to 3.75% when it concludes its policy meeting on Wednesday (Thursday AEST).
The Australian market had finished virtually flat on Tuesday after the Reserve Bank of Australia left the official cash rate unchanged at 4.35%, as expected, with the ASX 200 Index easing by 3.7 points to close at 8,917.7.
CommSec Equity Market Strategist James Gruber said energy shares could face selling pressure on the ASX today in the wake of lower oil prices, while technology shares might suffer a similar fate as a result of their peers falling overnight.
He said domestically-focussed interest-rate sensitive sectors, like banks, helped lift the ASX 200 on Tuesday following the RBA’s decision to keep interest rates on hold.
“So whether that follows through to today is probably a bigger question,” Gruber said.
In bond markets, yields on Australian Government securities dropped, with two-year rates dipping 0.34% to 4.46% and 10-year rates losing 0.31% to 4.787% at the time of writing.
