ASX set to lift, Wall Street recovers despite worries about US economy’s ‘hard landing’

Australian stocks are likely to rise in morning trade after Wall Street recovered from a two-day losing streak, as investors await how aggressively the US Federal Reserve will hike interest rates this week.

ASX futures were up 0.8 percent at 6,776 points by 7:25 a.m. AEST.

The Australian dollar held steady at 67.25 US cents.

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

At 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 braced themselves for the unlikely possibility that the Fed’s tone will be less dovish than markets expect when policymakers hike rates on Wednesday.

“Positioning is being made just in case something comes out of the Fed that turns out to be less hawkish,” said Michael James, managing director of equities trading at Los Angeles-based Wedbush Securities.

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

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

“We may have a hard landing ahead of us”

Wall Street’s main indices were volatile for most of the day but managed to recover in the final hour of trading.

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