The ASX is set for a weaker open on Monday, with futures down around 56 points (0.65%) at 9:45 am AEST, as escalating tensions in the Middle East put energy markets back under pressure.
The cautious lead comes despite another strong finish on Wall Street, where the S&P 500 and Nasdaq closed at new record highs on Friday after a stronger-than-expected US jobs report reinforced confidence in the resilience of the American economy.
Locally, the softer open follows a volatile end to last week, with the ASX 200 tumbling 1.5% on Friday as rising oil prices and renewed military escalation in the Strait of Hormuz triggered broad-based selling across banks, property and defensive yield sectors.
And it has been a flat day for Australia's gaming sector, where PayID payment options for online pokie sites are now gaining traction with punters.
Wall Street powers higher on jobs surprise
US markets finished the week on a strong footing, led once again by technology and semiconductor stocks.
The S&P 500 rose 0.84% and the Nasdaq jumped 1.71%, extending a strong six-week run for US markets, while the Dow Jones was little changed.
The main catalyst was the April payrolls report, with the US economy adding 115,000 jobs — well above forecasts of around 65,000 — while unemployment held steady at 4.3%.
The figures reinforced the view that economic activity remains relatively firm despite higher interest rates and elevated energy costs.
Technology stocks again drove much of the advance. Intel surged nearly 14% after reports it had reached a preliminary chip manufacturing agreement with Apple, while Nvidia and other AI-linked names continued their powerful run higher.
Oil and geopolitics back in focus
Weekend developments in the Middle East added another layer of uncertainty, with reports of new Iranian drone strikes targeting infrastructure in the Gulf region further straining already fragile negotiations with the US.
Brent crude jumped about 4% in early trade Monday to around US$104 a barrel, reviving concerns that supply disruptions through the Strait of Hormuz could persist longer than previously expected.
The situation remains fluid. Iran has reportedly shown some willingness to dilute enriched uranium stockpiles and allow limited LNG traffic through the Strait, but major sticking points remain around sanctions and nuclear enrichment.
For markets, the immediate concern is inflation. Higher oil prices are feeding directly into expectations that central banks may need to keep rates elevated for longer.
Commodities and currencies
Commodity markets reflected the uneasy mix of stronger growth signals and renewed geopolitical risk.
- Copper rallied close to 2% to near record highs, lifting copper miners globally
- Gold pushed back above US$4,700/oz as investors sought defensive exposure
- Oil continued to climb, with WTI above US$95 a barrel
The divergence highlights the unusual dynamic currently driving markets — resilient economic data supporting industrial demand, while geopolitical tensions simultaneously lift safe-haven buying and energy prices.
Currency markets were relatively steady. The Australian dollar slipped slightly to around US$0.722 after recent gains, while the US dollar softened modestly against major peers.
Bond yields eased following the payrolls report, with the US 10-year yield drifting back towards 4.36%.
ASX hit by broad sell-off
Locally, Friday’s session marked a sharp reversal from the previous day’s rebound, with the ASX 200 sliding 1.5% as investors rotated back into a more defensive stance.
Financials led the declines, with all four major banks sharply lower, while real estate and utilities also came under pressure as rising bond yields weighed on yield-sensitive sectors.
Materials stocks were mixed. Major diversified miners slipped despite stronger copper prices, though some critical minerals and copper-exposed names outperformed. Gold stocks proved comparatively resilient as bullion prices climbed.
What’s happening today
With oil and geopolitics back at the centre of market attention, investors will also be watching Tuesday night’s US inflation data and tomorrow’s Federal Budget locally, while Trump’s upcoming meeting with Xi Jinping in Beijing is expected to keep trade and critical minerals firmly in focus.