ASX Set for Positive Open as Wall Street Rebounds Before Fed Rate Decision

The Quick Take

• ASX 200 futures point to a positive Monday open after US equities rebounded overnight
• Wall Street's rebound was triggered by easing oil prices, which briefly lowered rate-hike fears
• The Federal Reserve's rate decision this week remains the central event risk for global markets

Australian equity markets enter the week in a constructive mood, buoyed by a Wall Street rebound that came as oil prices pulled back from recent highs. For the ASX, a lower oil print is a double-edged signal: it reduces cost-push inflation domestically — supporting an RBA hold — but also reflects demand-side caution that can weigh on resources exporters. Materials and energy stocks, which together account for around 30 per cent of the ASX 200 by weight, tend to move in lockstep with commodity prices, meaning the net benefit to the index depends on which of these competing forces dominates in Monday's session.

The Federal Reserve's meeting this week is the dominant macro overlay for all global markets. Markets are pricing a high probability of a rate increase — an outcome that would strengthen the US dollar, pressure emerging-market assets, and potentially push AUD/USD lower as the rate differential narrows. For Australian investors, a Fed hike also resets the floor for global risk-off sentiment: if the dot plot signals further increases beyond this week, earnings multiples on growth stocks in particular could compress sharply, outweighing the near-term positive from Wall Street's Monday rebound.

Watch the ASX 200's intraday range on Monday as an early guide to whether the Wall Street rebound has legs locally. Iron ore futures and overnight spot metal prices will signal whether Chinese demand is holding — any deterioration there would damp the materials sector's ability to sustain the index's upward bias. The AUD/USD level at the open will indicate how foreign institutional investors are positioning ahead of the FOMC, with a sustained move below 0.64 suggesting genuine risk-off rather than a tactical rebound from prior selling pressure.

Synthesized from 2 sources.