The ASX looks set to open modestly higher on Wednesday, with futures up 58.7 points (+0.7%) at 9:30 am AEDT, even as global markets struggle to find direction amid conflicting headlines on the Iran conflict and rising inflation pressures.
Overnight, Wall Street slipped, but not dramatically, as investors weighed tentative signs of diplomacy against ongoing military escalation. At the same time, bond yields pushed higher and volatility ticked up, underscoring a market still on edge.
Global markets caught between hope and risk
US benchmarks finished lower across the board, with the S&P 500 down 0.37%, the Dow easing 0.18% and the Nasdaq falling 0.84%. Small caps were a rare bright spot, with the Russell 2000 gaining 0.45%.
Markets reacted to a steady stream of contradictory developments: suggestions of renewed talks between the US and Iran were quickly offset by reports of further missile strikes and troop deployments.
That uncertainty is feeding into inflation expectations, with US Treasury yields climbing again and the VIX edging higher.
Oil, gold and commodities reflect uncertainty
Commodity markets continue to mirror the broader indecision.
Oil prices pushed slightly higher, with WTI holding near US$88 a barrel after sharp swings in recent sessions. Traders remain highly sensitive to geopolitical headlines, particularly around supply risks in the Middle East.
Gold rebounded around 1.5% overnight after recent losses, while copper rose just over 1%, supported by steadier sentiment across Asia.
Asia steadier as China leads gains
Asian and European markets offered a more positive lead than Wall Street, with Hong Kong, China and India all posting solid gains.
Chinese equities were a standout, rising strongly as investors rotated back into risk assets, while Japan also advanced.
ASX rebounds but struggles to hold momentum
Locally, the ASX 200 edged 0.16% higher on Tuesday, though the session faded into the close as early optimism around a potential Middle East de-escalation quickly unravelled.
Materials led the market, rebounding 2.9% as mining stocks recovered from recent heavy selling, supported by strength in gold, copper and lithium.
That strength was offset by weakness in financials, while technology and healthcare stocks also drifted lower.
Small caps show resilience
The broader market may be fragile, but small caps showed some signs of life.
The Small Ordinaries rose 0.45%, while emerging companies jumped 2%, pointing to pockets of selective risk appetite.
A handful of small-cap updates are likely to draw attention with early updates today:
- Critical Resources Ltd (ASX:CRR, FRA:9S70) reported first-pass drilling at its Cap Burn project in New Zealand has confirmed a broad, structurally controlled orogenic gold system, with mineralisation open along strike and at depth and a >1km² arsenic anomaly supporting further targeting.
- Astral Resources NL (ASX:AAR) delivered multiple high-grade gold hits from drilling at the Spargoville project in WA, including standout intersections such as 13m at 7.1g/t gold and 4m at 11.0g/t, with mineralisation remaining open at depth and extending known zones.
Inflation data in focus
Attention now turns to today’s key domestic data release, with the February monthly CPI indicator due at 11:30 am AEDT.
The print will be closely watched for signs that inflation is proving more persistent than expected, particularly in the context of rising energy costs tied to the Middle East conflict.
What to watch today
The near-term outlook remains finely balanced.
Markets are attempting to stabilise after a volatile period, but geopolitical developments and inflation data remain the key drivers.
For the ASX, early gains may be supported by strength in commodities and Asian markets, but direction through the session will likely hinge on today’s CPI print.
For now, investors appear cautious, even as selective opportunities continue to emerge across the market.