The ASX is poised for a modest rebound on Tuesday, with futures pointing up 8.3 points (+0.1%) at 9:45 am AEDT, following a mixed and uneasy lead from Wall Street as investors continue to grapple with escalating tensions in the Middle East and a sharp surge in energy prices.
While US markets gave little clear direction overnight, the broader tone remains fragile, with oil above US$100, bond yields falling and geopolitical risks dominating sentiment.
Global markets struggle for direction
US equities finished mixed in choppy trade, with the Dow Jones eking out a small gain, up 0.1%, while the S&P 500 (-0.4%) and Nasdaq (-0.7%) extended recent losses, the latter weighed down by continued weakness in semiconductor stocks.
The S&P 500 is now hovering around six-month lows, reflecting growing concern that markets may not yet be fully pricing in the economic fallout from the Iran conflict.
Energy remains the central theme. WTI crude surged more than 5% to trade above US$100 a barrel for the first time since 2022, while Brent has recorded a record monthly gain as fears of supply disruption intensify.
Markets are attempting to digest a rapidly shifting geopolitical backdrop. Conflicting signals from Washington — including threats to target Iranian energy infrastructure alongside hints at potential negotiations — have left investors cautious and reluctant to take strong positions.
At the same time, bond markets offered a degree of relief. US Treasury yields fell sharply after Federal Reserve chair Jerome Powell reiterated that longer-term inflation expectations remain anchored, easing fears of an aggressive near-term tightening cycle.
Still, the broader macro picture is becoming more complex. Rising energy prices are feeding concerns about a renewed inflation shock, with economists warning of stagflationary conditions marked by higher costs and slower growth.
ASX under pressure as energy shock builds
Locally, the S&P/ASX 200 fell 0.65% on Monday to 8,461, as rising oil prices and geopolitical uncertainty weighed heavily on sentiment.
The sell-off was led by financials and technology stocks, both of which are sensitive to higher yields and shifting growth expectations. The ASX All Technology index dropped nearly 3%, while financials fell more than 2%.
That weakness was partly offset by strength in commodity-linked sectors:
- Energy stocks rose 2.3% as oil prices surged
- Materials gained 1.3%, supported by higher aluminium and gold prices
- Utilities and consumer staples also posted modest gains
In corporate moves, Greatland Resources Ltd (AIM:GGP, OTC:GRLGF, FRA:G8G, ASX:GGP) surged 11% after upgrading its Telfer gold resource by 150%, while AMP gained 3.2% following a $150 million share buyback announcement.
Despite the index closing lower, the session showed clear divergence — with commodity exposure providing a buffer against broader market weakness.
Commodities and currencies
Commodity markets continue to reflect the geopolitical backdrop, with energy and select metals leading gains:
- Gold: US$4,510/oz (+0.3%)
- Copper: slightly lower
- Aluminium: near four-year highs after supply disruptions in the Gulf
- WTI crude: ~US$105/bbl (+5.4%)
The Australian dollar remains under pressure, trading around US$0.6846, as risk-off sentiment and a stronger US dollar weigh on the currency.
Meanwhile, US bond yields have pulled back, with the 10-year yield falling to around 4.34%, reflecting renewed demand for safe-haven assets.
What to watch today
Attention now turns to several key data points and policy signals:
- RBA meeting minutes (11:30am AEDT): Investors will look for clues on the central bank’s rate path, though rapidly changing conditions may limit their relevance
- China PMI data (12:30pm): A key read on regional economic momentum, with expectations of continued weakness
- Australian private sector credit: Another gauge of domestic demand
- US JOLTS job openings (overnight): Insight into labour market resilience
Markets will also continue to track developments in the Middle East, with any escalation — or signs of de-escalation — likely to drive further volatility across energy, currencies and equities.
For now, the ASX’s modest lift looks more like a pause than a turning point, with oil, geopolitics and central bank expectations continuing to set the tone.