ASX 200 futures are pointing higher again this morning, up 30.9 points (+0.35%) at 9:30 am AEDT, as global risk appetite remains constructive and commodity prices continue to do the heavy lifting. A sharp slide in the US dollar overnight has turbocharged metals, while the Australian dollar has pushed decisively above US70c for the first time since early 2023.
The local market heads into the session with momentum firmly on its side after Tuesday’s broad-based rally lifted the benchmark within striking distance of record highs.
ASX closes higher as resources reclaim centre stage
The ASX 200 climbed 0.92% on Tuesday, supported by strong participation across most sectors and a clear rotation back into materials. Telcos, healthcare and consumer stocks also contributed, while property and parts of tech lagged.
Resources were again front and centre, with a renewed surge in metals pushing heavyweight miners higher. The rally was strong enough to see BHP retake the title of the ASX’s largest company, overtaking Commonwealth Bank as rising copper and precious metals prices drove fresh buying across the sector.
Banks also added support, extending a recent run as investors continue to reassess the local rate outlook, while defensives held steady into the close.
Away from the index heavyweights, healthcare and biotech saw pockets of strength, while selective consumer names responded positively to trading updates and earnings momentum.
Wall Street mixed, but risk appetite intact
Overnight, US markets delivered a more nuanced picture. The S&P 500 rose 0.4% to fresh highs, while the Nasdaq gained nearly 1%, powered by another strong session for mega-cap tech ahead of a busy earnings slate. The Dow, however, fell around 0.8%, reflecting some rotation away from defensives and industrials.
Market breadth was softer than the headline indices suggested, with smaller stocks lagging after a long stretch of outperformance. Still, the overall tone remains risk-positive, with investors continuing to favour growth and technology amid expectations the US Federal Reserve will remain on hold.
Dollar slump fuels commodities and Aussie strength
The standout macro move overnight was another sharp fall in the US dollar, which slid to its weakest level since early 2022. That move has had a direct and immediate impact on commodities:
- Gold surged more than 3% to around US$5,170/oz, extending an already historic rally
- Silver jumped back above US$110/oz, regaining ground after a brief pullback
- Oil prices rose close to 3%, supported by the weaker greenback and renewed geopolitical risk
- Copper eased, but remains elevated after a strong recent run
For Australia, the softer US dollar has pushed the Aussie above US70c, a level not seen in almost three years. That strength reflects both yield support and Australia’s leverage to commodities, but it also sharpens the divide between sector winners and losers — favouring resources and energy, while creating headwinds for exporters and defensives such as healthcare and staples.
Bonds, rates and the RBA in focus
Bond markets were mixed overnight, with long-dated yields edging higher ahead of the US Federal Reserve’s policy decision. Locally, rate markets continue to lean hawkish, with pricing now implying a better-than-even chance of an RBA rate hike in February.
Today’s NAB business confidence data will be watched closely for confirmation that recent strength in activity is feeding through into sentiment and pricing pressures.
What to watch today
- Commodities and miners: Gold and silver remain the dominant macro drivers, with precious metals equities likely to stay in focus if prices hold near record levels
- Currency impact: The stronger Aussie could start to bite in sectors sensitive to offshore earnings
- Resource quarterlies: A busy morning for smaller and mid-cap miners may drive stock-specific moves
- Rates narrative: Any further upside surprises in local data will keep February firmly on the table
With global liquidity conditions improving, the US dollar sliding and commodities on the march, the local market is being pulled higher by familiar forces — even as the stronger currency and rising yields complicate the picture beneath the surface.