The ASX is set for a weaker start, with futures pointing sharply lower after Wall Street sold off on a bruising mix of surging oil, hotter-than-expected US inflation data and a more hawkish message from the Federal Reserve.
ASX 200 futures were down 154 points, or 1.78%, at 9:30 am AEDT, pointing to a reversal after the benchmark added 0.31% on Wednesday. The overnight shift in tone came as investors reassessed both the inflation outlook and the economic damage that could flow from a worsening Middle East conflict.
Wall Street turns lower
US shares finished near session lows, with the S&P 500 down 1.36%, the Dow off 1.63% and the Nasdaq losing 1.46%.
The Fed left rates unchanged at 3.50% to 3.75%, but Chair Jerome Powell said inflation is not easing as quickly as hoped. Updated projections showed inflation forecasts moving higher, while traders pared back expectations for rate cuts to just one 25 basis point move by the end of 2026.
That cautious message landed on top of stronger-than-expected US producer price data. Headline PPI rose 0.7% in February, well ahead of forecasts, while core prices also came in hot. That reinforced the sense that inflation pressures were already sticky before the latest oil shock gathered pace.
US bond yields rose again, with the 10-year Treasury pushing above 4.25%, while the VIX volatility index jumped more than 12%.
Oil becomes the main problem again
The bigger market issue, though, was energy.
Brent crude jumped 6.6% to settle above US$110 a barrel, its highest close since July 2022, while WTI rose to just under US$100. The move came as the conflict between Iran, Israel and the US intensified, with attacks now directly hitting key energy infrastructure.
The market is increasingly worried that the war is no longer just a geopolitical risk sitting in the background. It is now disrupting supply, keeping pressure on shipping routes and feeding straight into the inflation outlook for major economies.
That is a particularly awkward setup for central banks. Higher oil prices hit growth, but they also keep inflation elevated, leaving policymakers with less room to ease.
Commodities sell off beyond oil
Outside energy, it was a rough night for commodities.
Gold dropped 3.8%, copper fell more than 5% and silver lost more than 4%, while resource-linked ETFs also came under pressure. Gold miners were down more than 6%, copper miners nearly 4%, and lithium and strategic metals were also sold heavily.
That mix suggests investors are becoming more concerned about slower growth and tighter financial conditions, even as oil keeps rising. For the ASX, it points to likely weakness across miners and other rate-sensitive cyclicals.
- Brent crude: above US$110, up 6.6%
- WTI crude: near US$100, up 3.8%
- Gold: US$4,818, down 3.8%
- Copper: down 5.0%
- AUD/USD: around 70.25 US cents
- Bitcoin: around US$71,300, down 4.3%
Local market had steadied — but the lead has turned
Before the overnight sell-off, the ASX had managed a second straight gain on Wednesday, rising 0.31% as easing oil prices and softer yields briefly gave the market some breathing room.
Ten of the 11 sectors finished higher. Tech stocks led the rebound, with utilities, real estate and energy also firmer. Sims was a standout after upgrading full-year EBIT guidance, while Electro Optic Systems and Humm Group also posted strong gains.
Small caps had also improved, with the Small Ordinaries up 1.23%, but that recovery now looks vulnerable given the much weaker offshore lead.
What to watch today
In light early small-cap news flow, Resource Minerals International Ltd (ASX:RMI) said a new detailed magnetic survey at its Mpanda project in Tanzania has sharpened copper-gold drill targeting across the Kabungu, Ibindi and Kabatini prospects. The company said fieldwork is now under way to verify targets ahead of a second-phase drilling program expected to begin in the September quarter.
Lightning Minerals Ltd (ASX:L1M, FRA:YZ1) also flagged a leadership update, appointing experienced mining executive Troy Brice as chief executive officer from 23 March, bringing more than 25 years’ experience across global resource and energy projects.
The main macro focus locally is the labour market, with Australia’s unemployment data due this morning. Offshore, attention turns to policy decisions from the Bank of Japan, Bank of England and European Central Bank.
Markets will also stay glued to the Middle East. If oil keeps climbing and bond yields remain elevated, the pressure on equities is unlikely to ease quickly.