ASX set for more losses as Wall Street edges lower

Stocks are turning lower in late trading on Wall Street following the market’s worst day in two years on fears about higher interest rates and the recession they could create.

The S&P 500 is 0.1 per cent lower in late trade after a small morning rebound fizzled out. The benchmark index is coming off its biggest drop since June 2020, which ended a four-day winning streak. The Dow Jones Industrial Average has slipped by 0.2 per cent and the Nasdaq is 0.3 per cent higher.

The Australian sharemarket is set to open lower, with futures at 5.06am AEST pointing to a fall of 20 points, or 0.3 per cent, at the open. On Wednesday, the ASX shed 2.6 per cent -its worst decline in almost three months.

Energy stocks had some of the biggest gains on Wall Street as US crude oil prices rose 2.6 per cent. Exxon Mobil rose 2.9 per cent.

Bond yields remained relatively stable after leaping on Tuesday. The yield on the two-year Treasury rose to 3.77 per cent from 3.75 per cent late Tuesday, when it soared on expectations for more aggressive interest rate hikes by the Federal Reserve.

Loading

The yield on the 10-year Treasury, which helps dictate where mortgages and rates for other loans are heading, rose to 3.42 per cent from 3.41 per cent.

A report on inflation at the wholesale level showed prices are still rising rapidly, with pressures building underneath the surface, even if overall inflation slowed. It echoed a report on inflation at the consumer level Tuesday, which raised expectations for interest-rate hikes and triggered a rout for markets.

Traders now see a one-in-three chance the Fed may hike its benchmark rate by a full percentage point next week, quadruple the usual move. The central bank has already raised its benchmark interest rate four times this year, with the last two increases by three-quarters of a percentage point.