ASX set to rise, Wall Street rallies amid concerns over US economy ‘hard landing’

Australian stocks are expected to rise in morning trade after Wall Street recovered from its two-day losing streak as investors wait to see how aggressively the US Federal Reserve will raise interest rates this week.

ASX futures rose 0.8% to 6,776 points, as of 7:25 a.m. AEST.

The Australian dollar remained stable at 67.25 US cents.

The Reserve Bank will release minutes from its September meeting at 11:30 a.m. AEST – and investors will be looking for clues as to whether the next interest rate hike will be 0.25 or 0.5 percentage points.

In a parliamentary hearing on Friday, RBA Governor Philip Lowe said the central bank may consider slowing the pace of its rate hikes.

US markets rallied as hedge funds positioned themselves on the possibility that the Fed’s tone was less onerous than markets expected when policymakers hiked rates on Wednesday.

“There is positioning going on just in case something comes out of the Fed that turns out to be less hawkish,” said Michael James, managing director of equity trading at Wedbush Securities in Los Angeles.

“I don’t think anyone is predicting this is going to happen, but it is positioning itself for the possibility of it happening.

“The majority of people are in the negative camp right now.”

“We may suffer a hard landing”

Major Wall Street indices were volatile for most of the day, but managed to rebound in the final hour of trading.

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