A rise in bond yields that drove Wall Street down overnight has positioned the Australian sharemarket to follow suit on Thursday.
The biggest falls in a month by the major United States stock indices on Wednesday (Thursday AEST) are likely to leave the Australian Securities Exchange about 1% lower when it opens, according to futures trading.
The S&P/ASX 200 June share price index contract was 82 points (0.97%) below the previous settlement at 8,326 at 9:10 am AEST (11:10 pm GMT Wednesday).
U.S. stocks closed sharply lower as Treasury yields spiked on concerns about the size of the government's budget deficit and debt if President Donald Trump’s planned tax cuts are approved.
The Dow Jones Industrial Average declined 1.9%, the S&P 500 lost 1.6% and the tech-heavy Nasdaq Composite gave away 1.4% after long bond yields jumped, with the 10-year rate rising 10.8 basis points to 4.589%.
The low start would reverse some of the gains over the last two sessions of the Australian Securities Exchange, which ended on Wednesday at a three-month high amid hopes of more Reserve Bank of Australia (RBA) interest rate cuts this year.
The S&P/ASX 200 index rose 0.5% to finish at 8,386.80, just 2% under its record peak reached in February.
Although it comes after the close of trading, attention is likely to be paid to a speech by RBA Deputy Governor Andrew Hauser at 6:30pm AEST at the Lowy Institute in Sydney.
In corporate news, annual general meetings will be held by GQG Partners (ASX: GQG), Karoon Energy (ASX: KAR) and Nickel Industries (ASX: NIC) while Amcor (ASX: AMC), Aristocrat Leisure (ASX: ALL) and Orica (ASX: ORI) trade ex-dividend, CommSec said.
On fixed interest markets, the Australian Government bond yield curve steepened as 10-year rates added 0.53% to 4.511% while 2-year rates dipped 0.58% to 3.454%.
