### ASX Set for Modest Dip as Global Markets Pause, Fed Policy in Focus
#### Article Adapted and Expanded from the Work of Emma Rapaport, The Australian Financial Review
Australian shares are expected to open lower, matching a cautious mood sweeping through global equity markets. Investors are digesting a medley of signals: weaker performances from major US retailers like Walmart, anticipation of a key speech by Federal Reserve Chair Jerome Powell, and continuing concerns about the durability of the global economic recovery. The complexities facing traders are compounded by fluctuations in the US dollar, bond yields, and commodity prices.
#### Global Market Overview
– US stocks closed slightly lower, reflecting uncertainty after a strong rally in previous sessions.
– Dow Jones Industrial Average: Down 0.1 percent
– S&P 500: Down 0.2 percent
– Nasdaq Composite: Down 0.3 percent
– European and Asian markets also showed a mixed picture with modest gains and losses across major indices.
#### Lead Indicators for the ASX
Australian futures contracts indicated the S&P/ASX 200 would open about 0.2 percent weaker. This comes after a mixed performance by US equity benchmarks and as local investors digest earnings season results. Commodities markets, including copper and iron ore, also weakened, with potential for ripple effects across Australian resources stocks.
#### Key Factors Driving Market Sentiment
##### 1. Slipping US Retail Giants
– Walmart reported weaker-than-expected results, citing cautious consumer behavior and rising cost pressures.
– The company, a bellwether for US retail trends, signaled challenging conditions ahead with slowed sales growth and shrinking margins.
– This impacted retail stocks broadly, weighing on the consumer discretionary sector.
– Target and Home Depot also noted mixed results, compounding market anxiety.
##### 2. All Eyes on Powell’s Jackson Hole Speech
– Federal Reserve Chair Jerome Powell is set to deliver a much-anticipated address at the annual Jackson Hole Economic Symposium.
– Investors hope to glean clues about the path of US interest rates, inflation expectations, and future monetary policy.
– After aggressive rate hikes in 2022 and early 2023, opinions are divided over whether the Fed will keep tightening or signal a pause.
– Bond markets have been volatile, with the yield on the US 10-year Treasury recently hitting multi-year highs before retreating.
– Any hint from Powell about monetary easing or continued hiking could trigger sharp movements in equity, currency, and fixed-income markets.
##### 3. Currency and Commodity Movements
– The US dollar index climbed, reflecting investor risk aversion and expectations of continued Fed hawkishness.
– The Australian dollar slipped against the greenback, making local exports more competitive but raising costs for importers.
– Key commodities:
– Iron ore prices fell, pressured by demand concerns out of China.
– Oil prices remained volatile amid global growth worries and reports of higher inventories in the US.
– Gold prices drifted lower, under pressure from
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