ASX set to slip as Wall Street slides on inflation worries

Australian shares were set to open lower after Federal Reserve Chair Kevin Warsh used his first Jackson Hole speech to emphasize that inflation had not yet given the U.S. central bank enough comfort.

Warsh said the Fed would have “more work to do” unless it was confident inflation was moving toward its 2% target clearly and quickly enough. His comments erased early gains in U.S. equities and increased expectations of a September rate hike.

The S&P 500 fell 0.25%, the Dow Jones Industrial Average was nearly flat and the Nasdaq lost 0.5%. Nvidia dropped 4.3%, while Marvel Technology fell more than 10%. Gains in Alphabet and Apple limited some of the pressure. European markets had already closed higher, with the Euro Stoxx 600 gaining 0.5%.

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More work to do.

ASX 200 futures pointed to a 0.4% decline, after the Australian benchmark rose 0.6% on Friday to 9,092 points. The index gained 0.4% over the week, ending a two-week losing streak. The Australian dollar was steady at 71.58 U.S. cents, while spot gold fell 3.2% to $4,453 an ounce.

CME Group’s FedWatch tool showed traders pricing a 56% chance of a September rate hike, up from 35% on Thursday. Markets were split between a hike and a hold after mixed inflation data earlier in the month. NAB rates strategist Ken Crompton said Warsh had reinforced a hawkish position without indicating where interest rates would ultimately go.

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The crisp mountain air of the Grand Tetons may have helped bring clarity of speech to Fed Chair Warsh, who marked his 100th day in the job by offering seven principles to navigate by.