The ASX is set for a firmer open on Wednesday, with futures up about 45 points (+0.5%) at 9:40 am AEST after another strong session on Wall Street, where easing oil prices, softer producer inflation and renewed hopes for US-Iran talks kept risk appetite alive.
The positive lead follows a solid local session on Tuesday, when the S&P/ASX 200 added 0.50% as investors looked past the start of the US naval blockade of the Strait of Hormuz and instead focused on the possibility that diplomacy may yet prevail.
Wall Street pushes back toward record highs
US markets extended their rebound overnight, with the S&P 500 climbing 1.18%, the Dow Jones gaining 0.66% and the Nasdaq surging 1.96% to finish near session highs.
The latest move has pushed US markets back towards record territory, with both the S&P 500 and Nasdaq now within striking distance of their previous highs. The latest leg higher was led by large-cap tech, with Nvidia, Alphabet, Amazon, Meta and Tesla all rising between 3% and 4%.
The tone was distinctly risk-on. Communication services led sector gains with a 3.18% rise, followed by consumer discretionary and technology, while more defensive areas lagged and energy stocks fell back as oil prices retreated.
US earnings also helped underpin sentiment. Citigroup posted its strongest quarterly revenue in a decade, BlackRock reported a sharp lift in revenue and assets under management, and JPMorgan delivered another strong trading-led result even as its shares finished slightly lower after trimming net interest income guidance.
Diplomacy hopes cool oil, for now
The latest rally is still resting heavily on the idea that the conflict in the Middle East may stop short of a deeper economic shock.
The US naval blockade of Iranian ports has begun, but markets took encouragement from signals that another round of in-person talks could happen as early as this week.
That was enough to send oil sharply lower. WTI crude fell 7.87% to US$91.28 a barrel, while Brent dropped back towards US$95, unwinding some of the extreme risk premium built up in recent weeks.
Even so, the situation is far from resolved. The blockade remains in place, tanker traffic is still heavily disrupted and physical shortages are still a live risk for refiners in coming weeks. France and the UK have also announced a joint summit aimed at building a defensive multilateral mission to help reopen the Strait of Hormuz.
Commodities and currencies send a mixed message
Commodity markets painted a more nuanced picture than equities. Oil fell heavily, but gold climbed 2.09% to US$4,844.54 an ounce and copper rose 1.68% to US$6.08, suggesting investors are still keeping one eye on inflation risk and supply disruption even as broader market sentiment improves.
Silver also jumped more than 5%, while gold miners and copper miners both traded higher in the US session. Iron ore, by contrast, remained softer.
Currency markets were steadier. The Australian dollar held above US71 cents at US$0.7127, while US bond yields eased, with the 10-year Treasury yield falling to 4.256%. Volatility also continued to retreat, with the VIX slipping below 19.
ASX builds on improving tone
Locally, Tuesday’s 44.8-point rise in the ASX 200 was driven by a shift back into growth stocks, with tech names bouncing as bond yields eased, while materials also found support.
The local backdrop remains a little less straightforward than the US one. Confidence indicators have weakened sharply, with both consumer and business sentiment sliding as the Iran conflict weighs on the domestic outlook.
Still, for today at least, the setup looks constructive. A rebound in global tech, softer oil and another drop in yields should support growth sectors again, while weakness in energy names may continue if crude keeps unwinding.
On the corporate front, Yancoal Australia Ltd (ASX:YAL) has struck a US$1.85 billion deal to acquire an 80% stake in the Kestrel coal mine, with up to US$550 million in additional payments, while Boss Energy Ltd (ASX:BOE, OTCQX:BQSSF) has again trimmed FY26 production guidance at Honeymoon following weather-related disruptions.
What to watch today
With no major domestic economic releases scheduled, the market is likely to stay focused on offshore headlines and sector rotation.
Tech and consumer names may continue to lead if the risk-on mood holds, especially after the strong overnight move in the Nasdaq. At the same time, investors will be watching to see whether energy stocks can stabilise after oil’s sharp slide, and whether the market’s confidence in renewed diplomacy proves justified.
For now, the market is trading as though a constructive outcome is still the most likely path. But with the blockade still in place and the next round of talks not yet locked in, that optimism remains vulnerable to the next headline.