The S&P/ASX 200 Index futures were down 17 points or 0.19% at 8:30 am AEST, indicating a softer open for the Australian bourse after yesterday’s marginal decline of 7 points to close at 8,541. The index traded in a narrow 54-point range over the past two sessions, constrained by escalating tensions in the Middle East.
Sector performance was mixed on Tuesday, with Utilities (-0.68%), Health Care (-0.25%) and Financials (-0.25%) dragging the index lower, while Real Estate (+0.36%), Information Technology (+0.23%) and Consumer Staples (+0.13%) provided some support.
The Financial sector extended its decline for a fifth straight session. In contrast, uranium stocks rallied on expectations of increased spot market purchases by the Sprott Physical Uranium Trust. Bannerman Energy jumped 11.82% to A$3.31, while Paladin Energy, Deep Yellow, and Boss Energy posted gains between 3% and 6%.
US markets retreat on fears of military escalation
Wall Street fell overnight on fears of deeper US involvement in the Israel-Iran conflict. Concerns are mounting that the US could authorise strikes on Iran’s Fordow nuclear facility.
The Federal Reserve meets tonight, and while the market assigns just a 14.5% chance of a dovish shift, some analysts believe geopolitical risks could prompt the Fed to prepare for a July rate cut. The latest Bank of America fund manager survey highlighted improved sentiment, a reduction in cash holdings, and increased expectations for a soft landing.
Europe hits near one-month lows
European equities closed lower on Tuesday, with the FTSEurofirst 300 down 0.9% and the UK’s FTSE 100 off 0.5%.
Banking stocks led declines, falling 1.9%, while the energy sector gained 1.2% as crude prices rallied.
Market sentiment was weighed down by the conflict’s fifth consecutive day and its implications for economic stability across the region.
Currency and commodity markets react to conflict
The US dollar strengthened overnight. The euro weakened to US$1.1480, the Australian dollar eased to US64.70 cents, and the Japanese yen traded at JPY145.25.
Oil prices surged more than 4% amid Middle East tensions, with Brent settling at US$76.45 per barrel and Nymex crude at US$74.84. Gold slipped 0.3% to US$3,406.90 an ounce, and copper fell 0.5%. Aluminium gained 1.6%. Iron ore declined 0.4% to US$94.86 per tonne amid muted demand and reduced Chinese steel production.
What about small caps?
In contrast to the other markets, the S&P/ASX Small Ordinaries (XSO) finished 0.41% higher yesterday and is up 0.64% over the last five days.
There’s been some good news this morning and you can read about the following and more throughout the day.
- Imugene Limited (ASX: IMU) has received a Notice of Allowance from the United States Patent and Trademark Office for patent application 16/637,909, securing protection for its oncolytic virotherapy CF33-CD19 and its use in combination with CD19-targeting CAR T cell therapies.
- Ionic Rare Earths Ltd is broadening the scope of the Viridion Joint Venture (IXR: 50%; Viridis Mining and Minerals Ltd: 50%) to include a potential United States-based rare earths refinery, complementing its proposed Brazilian facility and existing plans for a magnet recycling operation. The JV partners are also advancing discussions on US-refined supply of magnet and heavy rare earth oxides.
- European Lithium Ltd has announced that Critical Metals Corp. (Nasdaq: CRML), which it is set to merge with, has secured a conditional Letter of Interest from the Export-Import Bank of the United States for a non-dilutive funding package of up to US$120 million.
- Resolution Minerals Ltd has appointed Clewett Global Services to oversee external affairs for its Horse Heaven antimony-gold-silver-tungsten project in Idaho, United States.
- Provaris Energy Ltd has completed Phase 2 of the design stage under its Joint Development Agreement with Yinson Production AS, submitting plans for a large-scale liquid CO₂ tank to Yinson and a Marine Classification Society for preliminary Class approval.
- Patronus Resources Ltd has reported further encouraging reverse circulation drilling results at the Merlin Prospect within its wholly owned 1 million ounce Cardinia Gold Project near Leonora, Western Australia.