Australian shares are set for a strong bounce on Tuesday, with ASX 200 futures up 77 points (+0.9%) as of 8:30am AEDT, pointing to a recovery after yesterday’s sharp sell-off.
The overnight lead was more constructive, with US markets shaking off early weakness to close near session highs, while extreme volatility in commodities showed early signs of settling. All eyes locally now turn to the Reserve Bank’s interest rate decision this afternoon, which is expected to dominate trading once the opening relief rally runs its course.
Offshore lead steadies after volatile start
Wall Street finished higher across the board after spending much of the session clawing back early losses. The Dow jumped just over 1%, while the S&P 500 and Nasdaq both gained around 0.5%, snapping a short losing streak.
The turnaround followed a stronger-than-expected lift in US manufacturing activity, with January data showing the sector back in expansion for the first time in more than a year. That helped stabilise sentiment after last week’s metal-led turmoil and reinforced the view that the US economy remains resilient, even as rate-cut expectations continue to be pared back.
Bond yields pushed higher, the US dollar firmed, and volatility eased, with the VIX slipping back toward the mid-teens.
Commodities still swinging, but selling pressure eases
Commodity markets remain the wild card. Gold was down about 4% overnight, after plunging as much as 10% intraday, while silver also endured another brutal swing. Oil prices fell more than 4% as easing tensions between the US and Iran prompted traders to unwind geopolitical risk premiums built up over recent weeks.
Despite the continued price weakness, resource equities held up better overnight, with gold and copper miners finishing broadly flat. That relative resilience could help temper further downside locally after Monday’s heavy rotation out of materials.
The Australian dollar eased to just under US70 cents, weighed down by the pullback in metals and ahead of the RBA decision.
ASX yesterday: commodities spark a sharp sell-off
Monday’s session was dominated by forced selling across resource stocks, with the ASX 200 sliding 1.0% to its lowest level in a month.
The materials sector fell more than 3% as the violent reversal in precious and base metals accelerated a rotation out of miners. Energy stocks also came under pressure, while healthcare and technology extended recent losses.
Banks provided support, with Commonwealth Bank rising strongly as investors rotated back toward defensives ahead of the RBA meeting.
Among large caps, BHP and Rio Tinto were relatively resilient, but copper and diversified miners bore the brunt of the move. Grain handlers GrainCorp slumped sharply after cutting earnings guidance, standing out as one of the session’s worst performers.
Small caps were hit hardest, with the Small Ordinaries down nearly 2%, reflecting how quickly risk appetite evaporated once the metals rally broke.
RBA decision looms large
Locally, the early focus will be on the stronger futures lead, before attention turns to the Reserve Bank’s first meeting of 2026 later today.
Markets are pricing roughly a 70% chance of a 25-basis-point hike to 3.85%, reflecting stubbornly high inflation and still-solid domestic demand. Any deviation from that script — or a surprise shift in tone from Governor Michele Bullock — could quickly reshape intraday sentiment, particularly for rate-sensitive sectors.
In early ASX corporate news, Credit Corp reported first-half NPAT broadly in line with last year but below market expectations, while reaffirming full-year guidance. Carma reported strong January delivery numbers, extending recent sales momentum.
The day ahead
The immediate question for the local market is whether yesterday’s commodity-driven sell-off marked a reset rather than the start of a deeper unwind. Early signs offshore suggest some stability is returning, but with commodities still swinging violently and the RBA decision just hours away, conviction is likely to remain fragile.
Expect a firmer open — then a wait-and-see approach as markets brace for the central bank’s call.