The Australian sharemarket is set for another rough session on Wednesday, with ASX 200 futures down 49 points (–0.56%) as global markets reel from a sharp risk-off move overnight. A surge in bond yields, fresh tariff threats from Washington and escalating geopolitical tensions heading into Davos combined to deliver Wall Street’s worst session since October.
That offshore weakness comes after the local market slipped again on Tuesday, dragged lower by a pullback in materials and renewed pressure on the banks.
ASX slips as materials take a breather
The S&P/ASX 200 closed 0.66% lower on Tuesday at 8,815.9, extending losses for a second session. Seven of the 11 sectors finished in the red, with materials and financials leading the retreat after weeks of strong gains.
Materials fell just over 1%, pausing after a powerful run that had pushed the sector to repeated record highs. Financials also weighed, while energy and real estate drifted lower. Utilities stood out on the upside, supported by Origin Energy after it extended the operating life of its Eraring coal power station.
Small caps were comparatively resilient, with the Small Ordinaries down 0.53%, while the All Tech index eked out a modest gain — a reminder that stock-specific stories continue to matter beneath the surface.
One of those stories was Qoria, which slumped sharply despite reporting record quarterly revenue and improved margins. The result added to a growing pattern of tech stocks being punished for “good but not spectacular” updates. In contrast, Xero climbed more than 3% as investors continued to warm to its new AI-driven analytics tools, while Weebit Nano also added to its strong recent run, surging more than 7%.
Wall Street rattled by yields and tariffs
Overnight, markets lost their footing in dramatic fashion. All three major US benchmarks closed sharply lower, with the Nasdaq down more than 2% as technology and other long-duration growth stocks bore the brunt of rising yields.
The trigger came from an unexpected surge in long-dated Japanese government bond yields, which rippled through global fixed income markets and pushed US Treasury yields sharply higher. The US 10-year yield jumped above 4.29%, lifting discount rates and undercutting equity valuations.
At the same time, geopolitical nerves flared after President Trump threatened new tariffs on European countries ahead of high-level meetings in Davos, reviving fears of a broader trade escalation tied to the ongoing Greenland dispute. Volatility spiked, with the VIX jumping above 20 for the first time since November.
Risk assets were broadly sold. Bitcoin slid back below US$90,000, while major cryptocurrencies fell between 5% and 7%. Ten of the 11 S&P 500 sectors finished lower, with technology, consumer discretionary and financials among the hardest hit.
Commodities diverge as gold shines
While risk assets sold off, safe havens surged. Gold vaulted more than 3% overnight to a fresh record above US$4,750 an ounce, while silver also notched an all-time high. The rally reflected a potent mix of geopolitical uncertainty, a weaker US dollar and renewed demand for defensive assets.
Elsewhere in the commodities complex, the picture was more mixed. Copper and nickel eased as higher prices deterred buyers, while iron ore slipped again amid signs of softer Chinese demand. Oil prices firmed modestly, supported by geopolitical risk and supply disruptions, while uranium edged higher and continues to trade near late-2025 highs.
What to watch today
Domestically, a run of quarterly updates from heavyweight miners and energy producers is likely to be closely watched for signals on margins and capital discipline as global conditions tighten.
With global sentiment fragile and bond yields moving sharply, resource stocks are likely to be especially sensitive to currency moves and any signals from China or Davos around growth, trade and supply chains.
On the data front, the Westpac Leading Index is due this morning, while UK inflation figures are released tonight. Markets will continue to parse developments out of Davos for clues on whether trade tensions cool — or escalate further.
For now, the tone is cautious. With volatility rising and global markets on edge, investors are likely to remain defensive, favouring balance sheet strength and selective exposure to commodities still benefiting from structural demand.