**ASX Set to Slide as Wall Street Pulls Back Ahead of Federal Reserve Decision**
*Adapted and expanded from an original article by Sarah Turner, AFR Markets. Additional information sourced from Reuters, Bloomberg, and FXStreet.*
The Australian sharemarket is forecast to open lower, following a subdued session on Wall Street as investors braced for an imminent interest rates announcement by the US Federal Reserve. Global financial markets are in a holding pattern, with all eyes on central banks, as well as US corporate earnings and fresh economic data.
### Wall Street Retreats Before Fed Decision
– US stocks finished mostly weaker overnight, as investors became increasingly cautious ahead of the Federal Reserve’s interest rate announcement.
– The S&P 500 index closed slightly down, while the Dow Jones industrial average also slipped. The Nasdaq inched into the green but gained little ground.
– Major technology shares wavered, driven by concerns that higher US interest rates could undercut valuations of fast-growing companies.
Key points:
– The S&P 500 slipped by 0.3 percent.
– The Dow Jones Industrial Average declined by 0.4 percent.
– The Nasdaq Composite remained mostly flat, gaining just 0.1 percent.
Bonds saw modest movement, with the yield on the 10-year US Treasury note holding around 4.25 percent, as traders speculated about the tone and guidance of the Fed’s next announcement.
### Focus on the US Federal Reserve Rate Decision
– Investors are closely monitoring the Federal Open Market Committee (FOMC) meeting, which concludes early Thursday (Australian time).
– The consensus expectation is that the US central bank will keep its benchmark rate steady at a 23-year high, reflecting recent data suggesting the US economy and labor market are gradually cooling.
– Of greater concern is the Fed’s language regarding the timing of its next rate cut. Hopes had been rising earlier in the year that rate cuts could come as soon as June; however, stubborn inflation reports in April and May saw markets push their expectations back to September or even later.
According to the CME FedWatch Tool, futures traders see:
– Around a 91 percent probability that the Fed will keep rates on hold at this meeting.
– About a 70 percent chance that the first rate cut will come in September.
### ASX Poised to Dip at Today’s Open
– The Australian S&P/ASX 200 futures contract was down by 37 points, signaling a likely decline at the open.
– This aligns with broader regional weakness in Asia and overnight movements in US equities.
**What’s Effecting Australian Markets:**
– Anticipation of the US Fed’s rate decision continues to weigh on investor sentiment.
– Australian shares in interest rate-sensitive sectors such as banks and property trusts may face pressure if rate cut timelines are perceived as being pushed out further.
– The local dollar remains rangebound, reflecting international uncertainty.
### International Markets: Key Developments
**European Markets:**
– European stock
Read more on AUD/USD trading.