Australian shares are set to open lower on Thursday, tracking a sharp drop on Wall Street, after US Federal Reserve Chairman Jerome Powell dampened expectations for further interest rate cuts.

The central bank announced its first interest rate cut in a decade, as expected, but markets slipped after Powell's speech, where he signaled that the cut was a "mid-cycle adjustment" and likely not the first of a series of rate cuts.

The local share price index futures fell 0.4% or 29 points at 2205 GMT, an 89.6-point discount to the underlying S&P/ASX 200 index   close. The benchmark shed 0.5% in the previous session.

New Zealand's benchmark S&P/NZX 50 index was down 0.2% at 10,835.05 in early trade.