ASX 200 futures were up 17 points or 0.19% at 8:30 am AEST, signalling a positive start to the session despite increased geopolitical risk and subdued US equity performance.
The ASX 200 edged 4 points or 0.06% higher yesterday to close at 8,592. Gains in Real Estate (+0.89%), Energy (+0.77%) and Materials (+0.63%) offset losses in Information Technology (-1.49%), Health Care (-0.83%) and Financials (-0.15%).
The index reached a fresh intraday high of 8,639.1 but faded as momentum waned and US futures weakened. The Financial sector hit a record high of 9,470 before retreating, with profit-taking evident across major banks.
In corporate news, Johns Lyng Group surged 17.72% to A$2.99 on a takeover offer. Zip Co rose 15.45% to A$2.69 after raising earnings guidance. Lynas Rare Earths fell 8.22% to A$8.60 on reports of a China–US rare earths export deal. Beach Energy declined 7.5% to A$1.23 after a broker downgrade.
US markets retreat on Mid East tensions
US markets retreated overnight following a spike in Middle East tensions. Iran warned it may target United States bases in the region should nuclear negotiations break down, prompting Washington to begin preparations to evacuate its Iraqi embassy. In parallel, a much-anticipated US–China trade agreement failed to impress, offering little change from Geneva’s earlier tariff arrangements.
The US rates market now prices in an 80% chance of a 25 basis point Federal Reserve rate cut in September, up from 65% a day earlier. A cumulative 50 basis points of easing is expected by year-end.
US inflation came in cooler-than-expected for the fourth consecutive month. Headline Consumer Price Index (CPI) rose 0.1% month-on-month (MoM), lifting the annual rate to 2.4%. Core inflation also rose 0.1% MoM, holding steady at 2.8% year-on-year (YoY), just below forecasts.
The Dow Jones index ended slightly lower, the S&P 500 index dipped 0.3% and the Nasdaq index shed 99 points or 0.5%.
European markets mixed
European sharemarkets closed mixed on Wednesday amid investor disappointment over a lack of substantive outcomes from US-China trade discussions, despite prior indications of high-level agreements.
The utilities sector, typically viewed as a defensive, bond-like investment, was the strongest performer on the day, rising 0.4%. In contrast, retailers weighed on the market, falling 1.7%, led by a 4.4% decline in Inditex after the Zara owner missed first-quarter sales forecasts.
The FTSEurofirst 300 index slipped 0.3%, while London’s FTSE 100 rose slightly, up 0.1%.
Currency movements diverge
Currency markets were mixed against the US dollar.
- The euro advanced from US$1.1404 to US$1.1498 before settling near US$1.1485 by the US close.
- The Australian dollar declined from US65.44 cents to US64.94 cents, trading around US65.00 cents late in the session.
- The Japanese yen strengthened from 145.40 to JPY144.32 per US dollar and was near JPY144.50 at the US close.
Oil surges on geopolitical risk
Crude oil prices climbed to their highest levels in over two months, driven by reports that the US may evacuate its Iraqi embassy amid rising Middle East tensions.
- Brent crude rose US$2.90 or 4.3% to US$69.77 per barrel.
- US Nymex crude gained US$3.17 or 4.9% to US$68.15 per barrel.
Commodities mixed
Base metal prices showed mixed performance.
- Copper futures fell 1.7% on persistent concerns about weakening Chinese demand, while aluminium gained 1%.
- Gold futures inched up US30 cents to US$3,343.70 per ounce, supported by softer US inflation data, which boosted expectations for a potential Federal Reserve rate cut by September. Spot gold was trading near US$3,354 at the US close.
- Iron ore futures edged up US31 cents or 0.3% to US$95.78 per tonne, buoyed by signs of progress in US-China trade discussions.
What about small caps?
The S&P/ASX Small Ordinaries (XSO) finished 0.049% higher yesterday at 3,250.90. It is up 0.25% over the last five days.
It’s a slowish start to the day for news flow, but you can read about the following and more throughout the day.
- Silver Mines Ltd has signed binding agreements to acquire the Calico North Silver Project and the Kramer Hills Gold-Silver Project in San Bernardino County, California. Both projects feature mineralised structures with a history of production, where multiple kilometres of potential mineralisation remain untested both near surface and at depth.
- Nexus Minerals Ltd has announced the receipt of gold assay results from its recently completed regional aircore drill program at the Wallbrook Gold Project, located in Western Australia’s north-eastern goldfields. The program comprised 237 drill holes for a total of 10,171 metres across three regional targets.
- Lindian Resources Ltd has received A$1.2 million from the exercise of 10 million unlisted options, priced at A$0.12 per share.