The ASX is set for a firmer open on Tuesday, with futures pointing about 85 points (1%) higher at 9:30 am AEST after a volatile overnight session on Wall Street stabilised late amid signs the US may hold off on further military escalation against Iran.
The stronger lead follows a heavy sell-off locally on Monday, when the ASX 200 dropped 1.45% as surging oil prices, rising bond yields and renewed inflation fears triggered broad-based weakness across miners, industrials and gold stocks.
Wall Street steadies after another volatile session
US markets finished mixed overnight but recovered from steeper early losses as sentiment improved through the session.
The S&P 500 ended nearly flat, down 0.07%, the Nasdaq slipped 0.51% and the Dow Jones rose 0.32%, with defensive sectors, financials and energy helping offset weakness in technology stocks.
Markets initially came under pressure as bond yields pushed higher again and traders reacted to conflicting headlines around the US-Iran conflict and the future of oil flows through the Strait of Hormuz.
However, sentiment improved after reports President Donald Trump had paused plans for a military strike on Iran following appeals from Gulf leaders to allow negotiations to continue.
Technology stocks remained under pressure, particularly across semiconductors and memory-chip names.
Seagate fell sharply after warning new chip fabrication capacity could take years to come online, while Micron and broader semiconductor indices also weakened as investors reassessed parts of the AI supply chain trade.
Even so, software and cybersecurity names held up relatively well, suggesting investors are becoming more selective within the broader technology sector rather than abandoning the AI theme altogether.
Bond markets remain a major focus
Rising bond yields continue to shape market direction globally.
The US 10-year Treasury yield briefly climbed above 4.6% overnight — its highest level in around a year — as traders further scaled back expectations for interest-rate cuts and began pricing in a growing possibility of another Federal Reserve hike before year-end.
Recent inflation data, combined with elevated oil prices and ongoing geopolitical risks, has complicated the outlook for central banks and weighed particularly heavily on long-duration growth stocks.
Oil climbs again as negotiations continue
Energy markets remained volatile overnight as traders weighed the possibility of renewed diplomacy against the ongoing risk of supply disruption in the Middle East.
WTI crude rose more than 3% to around US$109 a barrel, while Brent crude briefly pushed toward US$111 during the session.
Markets are continuing to monitor negotiations between the US and Iran, as well as developments around the Strait of Hormuz, where shipping activity remains heavily disrupted.
At the same time, China’s latest economic data added another layer of concern around global growth.
Retail sales, industrial production and fixed-asset investment all came in weaker than expected in April, pointing to slowing momentum across the Chinese economy as higher energy costs and softer consumer demand weigh on activity.
Commodities and currencies
Beyond oil, commodity markets delivered a mixed performance overnight.
- Gold rebounded modestly after last week’s sharp pullback
- Copper edged higher, supported by ongoing supply constraints despite weaker China data
- Bulk commodities were softer, with iron ore slipping back towards US$108 a tonne
Currency markets were relatively stable. The Australian dollar strengthened slightly to around US71.7 cents as the US dollar eased modestly against major peers.
Bitcoin drifted lower, while volatility indicators eased after Monday’s sharp moves in equities and bonds.
ASX hit by bond-sensitive sell-off
Locally, Monday’s trade was dominated by another aggressive rotation away from bond-sensitive sectors.
Real estate, utilities and gold stocks were among the hardest hit as higher global yields reduced appetite for defensive and income-focused areas of the market.
Materials stocks also weakened sharply following Friday’s sell-off in base metals, with BHP, Rio Tinto and Sandfire all falling.
Energy was the major exception. Woodside, Santos and Beach Energy all rallied strongly as oil prices surged again, while coal producers also benefited from price strength.
Industrials endured one of the steepest declines after Brambles slashed earnings guidance, triggering its largest one-day fall in more than two decades.
What to watch today
Investors will be closely watching the RBA meeting minutes at 11:30 am AEST for further clues around the central bank’s inflation and interest-rate outlook.
For now, markets remain caught between resilient corporate earnings and a far more difficult macro backdrop shaped by rising yields, elevated oil prices and ongoing geopolitical uncertainty.