Australian shares set to drop after Wall Street falls on hot US inflation data

Australian shares are set to open lower after Wall Street closed down, driven by hotter-than-expected US inflation data that has revived the possibility of a Federal Reserve rate hike in October. The Nasdaq fell 2.02% to 29,951 points, with the technology sector dropping 2.4%. US inflation rose 3.7% in the year to September, above the expected 3.6% and the highest since May's three-year peak of 4.2%. Monthly inflation increased 0.6% in September, led by fuel and electricity prices. Initial market panic eased, with two-year Treasury yields settling just 1 basis point higher at 4.80%, and pricing for an October hike falling back to around 33%. The inflation data matters for Australia because a US rate rise could strengthen the US dollar against the Aussie, adding local inflation pressure and potentially prompting the Reserve Bank of Australia to lift rates in November. Separately, Netflix cut 6% of its workforce, with shares down 0.2% to $US70.29, extending a 25% decline this year.