The ASX is set for a lift on Friday, with futures up 31 points (-0.35%) at 9:45 am AEST, as investors weigh another lift in oil prices against a more resilient-than-expected showing from global equities.
The positive open follows a weaker local session on Thursday, when the S&P/ASX 200 fell 0.57% as a renewed spike in oil and escalating tensions in the Middle East dragged most sectors lower.
Wall Street slips but steadies into the close
US markets finished lower overnight, with the S&P 500 down 0.41%, the Dow Jones falling 0.36% and the Nasdaq losing 0.89%, though all three recovered from deeper losses earlier in the session.
Selling pressure was most pronounced in technology, particularly software names, which gave back part of their recent rally. The iShares Expanded Tech-Software ETF dropped sharply after a strong multi-session run, while broader tech indices also weakened.
Even so, the tone was not uniformly negative. Defensive sectors attracted steady buying, with utilities, consumer staples, real estate and industrials all posting gains, suggesting investors are rotating rather than exiting the market entirely.
Oil surge keeps pressure on sentiment
Energy markets remain the dominant force shaping investor behaviour.
Brent crude climbed more than 4% to above US$106 a barrel, marking a third consecutive session of gains and pushing prices back to their highest levels in more than two weeks.
The move comes amid ongoing disruption in the Strait of Hormuz and continued uncertainty around the direction of US–Iran negotiations. Reports of additional mines in the region and increasingly forceful rhetoric from US officials have added to concerns that supply constraints could persist.
While equities have so far absorbed the move, the risk is that sustained higher oil prices begin to feed more directly into inflation expectations and corporate costs.
Commodities and currencies
Commodity markets reflected that tension between supply risk and broader caution.
- Crude held near recent highs, with WTI trading above US$95 a barrel in addition to Brent’s rise to US$106.49
- Gold slipped around 1% as higher bond yields weighed on the metal
- Copper fell more than 1.5%, pointing to softer sentiment around global growth
The divergence highlights a market still being pulled in different directions — with energy pricing in supply shocks while industrial metals weaken on demand concerns.
Currency markets were relatively steady. The Australian dollar held near US$0.713, while the US dollar firmed modestly as a safe-haven bid returned.
Bond yields pushed higher again, with the US 10-year yield rising to around 4.32%, while volatility ticked up, with the VIX holding near 19.
ASX under pressure as energy rallies alone
Locally, Thursday’s sell-off saw the ASX 200 extend its recent pullback, with losses broad-based across most sectors.
Energy was the standout, rising more than 3% as oil prices surged, but that strength was not enough to offset declines elsewhere, particularly in materials, technology and financials.
The session reflected a market increasingly sensitive to shifts in oil and geopolitics, with investors rotating away from sectors exposed to input costs and global growth risks.
Among notable movers:
- Santos Ltd (ASX:STO) gained on stronger production and the oil price rally
- Ampol rose after an update on its EG Australia takeover bid
- Temple & Webster fell sharply following leadership changes
- Sandfire Resources declined after weaker production results
The overall picture remains one of uneven performance, with sector-level moves driving index direction.
What to watch today
With limited domestic data on the calendar, attention will remain on offshore developments and sector rotation.
- Energy markets: Oil’s trajectory remains central to inflation expectations and equity sentiment
- Geopolitical headlines: Any shift in US–Iran negotiations could quickly move markets
- Sector rotation: Defensive strength versus tech and cyclicals will be closely watched
There are also several local updates in focus, including quarterly reports from major resource names and ongoing developments in the tech sector.
After a week dominated by geopolitical headlines and sharp commodity moves, markets are showing signs of fatigue. For now, the balance remains finely poised — with investors weighing resilient earnings and growth themes against the growing impact of higher energy costs and persistent uncertainty.