Australian shares are set to open slightly lower, with ASX 200 futures pointing down 5 points or 0.1% to 8530 at around 7.30am AEDT, after recovering from earlier losses of more than 40 points. The cautious start follows a volatile session on Thursday, when the S&P/ASX 200 dropped 142.8 points, or 1.65%, as surging oil prices and geopolitical tensions rattled investor sentiment.
Local markets are expected to track a softer global lead, though stabilising oil prices late in New York have helped pare earlier losses. Crude initially surged towards US$120 a barrel amid fears of escalating conflict in the Middle East, before retreating after Israel signalled it would avoid further strikes on Iranian energy infrastructure.
Israeli Prime Minister Benjamin Netanyahu said his government would hold off targeting Iran’s major gas field at the request of US President Donald Trump, while also assisting efforts to reopen the Strait of Hormuz — a key global shipping route.
The reversal in oil prices eased some inflation concerns that had earlier sparked a broad sell-off across equities.
Energy shock triggers sharp ASX sell-off
The Australian market fell heavily in the previous session as rising oil prices heightened fears of a prolonged inflation shock and further interest rate tightening.
Selling was widespread across growth and commodity-linked sectors, with only energy and defensive stocks offering relative shelter.
Woodside Energy Group (ASX:WDS) jumped 7.2% as higher oil prices boosted the sector and the company appointed former Anglo American CEO Mark Cutifani to its board. In contrast, Boss Energy (ASX:BOE) fell 6.8% following a uranium resource update, while Lynas Rare Earths (ASX:LYC) declined 2.7% despite announcing first production of samarium oxide. Orora (ASX:ORA) slipped 2.5% after naming a new chief financial officer.
US markets: late rebound trims losses
Wall Street closed lower but well off session lows as oil prices retreated late in trade.
The Dow Jones fell 0.4%, the S&P 500 lost 0.3% and the Nasdaq declined 0.3%, with 8 of 11 sectors finishing in the red.
Earlier weakness was driven by rising crude prices, which reignited inflation concerns and reinforced expectations that the Federal Reserve will delay rate cuts. Technology stocks were mixed, with Nvidia down 1% and Micron Technology falling 3.8% despite issuing a strong outlook, as investors focused on increased capital spending.
Materials stocks were among the hardest hit, with Newmont down 5.8% and Freeport-McMoRan off 3.4% as precious metal prices declined. Industrials also weakened, with GE Aerospace and Boeing among notable laggards.
Europe: markets slump on inflation warning
European equities fell sharply to three-month lows after the European Central Bank warned that inflation risks could intensify if the Middle East conflict persists.
The continent-wide FTSEurofirst 300 index dropped 2.4%, matching declines in the UK FTSE 100, while major markets in Germany and Spain fell more than 2%.
Mining stocks led losses, sliding 4.2% as gold prices retreated, while financials also weighed heavily on indices.
Currencies: US dollar weakens
The US dollar softened against major currencies.
- The euro rose to US$1.1585.
- The Japanese yen strengthened to 157.66 per dollar.
- The Australian dollar gained 0.7% to US70.83 cents.
Commodities: oil swings, metals slump
- Oil prices were highly volatile, surging above US$119 a barrel before retreating. Brent crude ultimately settled 1.6% higher at US$108.90 a barrel.
- Base metals were sharply lower, with copper falling 2.2% to three-month lows and aluminium dropping 5% as traders unwound bullish positions amid growth concerns.
- Gold extended its losses for a seventh straight session, falling nearly 6% to US$4606 an ounce as expectations of tighter monetary policy weighed on sentiment.
- Iron ore was relatively resilient, edging 0.1% higher to US$105.64 a tonne after China eased some restrictions on BHP cargoes.
Looking ahead, dividend payments remain a key focus locally, with Argo Investments, Sigma Healthcare, Australian United Investment, Diversified United Investment, Pro Medicus, Smartgroup, PWR and L1 Group all scheduled to pay today, while Latitude is set to trade ex-dividend.