Overnight, the UK printed new inflation data showing price pressures at the highest levels in 40 years.
US retailer Target Corp's first-quarter profit fell by half and the company warned of more hits due to rising fuel and freight costs.
"It's not just a problem here in Australia, it's a problem around the world," CommSec chief economist Craig James told the Nine Network on Thursday.
"Inflation prices (keep) going through the roof but wages aren't keeping up."Â
The Australian exchange is expected to follow the US lower after Wall Street indices lost up to four per cent of their value overnight.
The main ASX futures contracts, which is an indicator of how the broader index will trade, fell 126 points, or 1.75 per cent, to 7047 points.
This compares with the main S&P/ASX200 index close at 7,182.7 on Wednesday.
On Wall Street, the US S&P 500 fell four per cent to end at 3,925.18 points, while the Nasdaq Composite lost 4.69 per cent to 11,423.03 and the Dow Jones Industrial Average fell 3.52 per cent to 31,506.48.