The ASX is set to open slightly lower on Friday, with ASX 200 futures down about 12 points, or 0.14%, at 9:30 am AEDT, after another weak lead from Wall Street and a renewed surge in oil prices kept investors in defensive mode.
The local market heads into the final session of the week under pressure after Thursday’s 1.3% fall, with the broader backdrop still dominated by the same macro forces that have driven recent volatility: a worsening Middle East conflict, higher energy prices and rising bond yields.
Wall Street falls as crude pushes higher again
US stocks spent most of the overnight session moving lower and finished near their lows, with the Dow down 1.56%, the S&P 500 off 1.52% and the Nasdaq falling 1.78%.
The main drag was another sharp move in oil. Brent settled above US$100 a barrel and WTI above US$95 as the market absorbed fresh signs that any near-term resolution in Iran remains unlikely.
Reports that Iran had struck vessels in Gulf waters added to the tension, while new supreme leader Mojtaba Khamenei reportedly reiterated plans to keep the Strait of Hormuz closed. Even a major strategic reserve release failed to calm traders for long.
That kept the inflation story front and centre. The US 10-year yield rose to 4.27%, while volatility also picked up, with the VIX up more than 12%.
In sector terms, only energy, utilities and consumer staples managed to finish higher. Most of the market was weaker, with industrials, consumer discretionary, healthcare, tech and financials all losing more than 1%.
ASX gave back ground on Thursday
The local market had already taken a similar hit on Thursday. The S&P/ASX 200 dropped 114.5 points to 8,629, down 1.31%, as the rising oil price and broader risk-off mood pushed most sectors lower.
Energy was again the outlier, rising 2.08%, while information technology fell 3.45%, real estate lost 2.58% and materials dropped 1.6%.
The weakness was even sharper further down the board. The Small Ordinaries fell 2.49% and the Emerging Companies index lost 3.17%, showing the selling was broad rather than concentrated in a handful of large-cap names.
There were only a few bright spots, including Alcoa, which gained more than 4% on stronger aluminium price expectations tied to Middle East supply risks.
Commodities stay volatile
Oil remains the key market signal.
Crude has now risen far enough to shift attention away from the initial geopolitical shock and onto the economic consequences. Higher fuel and freight costs raise the risk of another inflation pulse just as central banks were already struggling to bring price pressures fully under control.
That is also why refiners and fuel-linked names could stay in focus locally. Reports that China has moved to cancel refined fuel exports add another wrinkle for Australia, which depends heavily on imported petrol, diesel and jet fuel.
Outside oil, the overnight lead was weaker. Gold fell nearly 2% to around US$5,079/oz, copper eased more than 1%, and most commodity-linked ETFs in the US finished in the red, including copper miners, lithium and battery tech, and gold miners.
The Australian dollar was little changed near US70.8 cents, while bitcoin eased modestly.
What’s on the agenda
In lighter early small-cap news flow, Terrain Minerals Ltd (ASX:TMX, OTC:TMXAF, FRA:T4Y) announced it has begun a follow-up air-core drilling program at its Lort River project in Western Australia targeting clay-hosted rare earth mineralisation. The ~1,500-metre campaign is designed to follow up a previous high-grade intersection of 8 metres at 4,037ppm total rare earth oxides, targeting a large interpreted regolith basin that could extend over more than 60 square kilometres.
Overseas, this evening brings UK GDP, then a busy US data schedule including core PCE, durable goods orders and JOLTS job openings.
The key question for the local market is whether energy strength can again cushion the broader market, or whether higher yields and weaker global equities drag the ASX lower across the board.
The Australian 10-year yield is hovering near 4.99%, around levels not seen in more than a decade, which is adding another layer of pressure.
For now, the market mood is still being set by crude. As long as oil keeps climbing and the Strait of Hormuz remains effectively choked, investors are likely to stay cautious — and that leaves the ASX facing another uneasy start to the day.