The ASX is set to open slightly higher on Monday, with futures up 19.6 points (+0.23%) at 9:20 am AEST after easing oil prices and another positive session on Wall Street improved market sentiment.
The stronger lead follows a volatile but ultimately positive session locally on Friday, when the ASX 200 rose 0.41% as strength across miners, lithium stocks and uranium names helped the market finish the week in positive territory despite continued volatility in bond markets and geopolitical headlines.
Wall Street pushes higher despite inflation concerns
US markets ended last week with modest gains, extending a surprisingly resilient rally despite persistent inflation worries and geopolitical uncertainty.
The S&P 500 rose 0.37%, the Dow Jones added 0.58% and the Nasdaq gained 0.19%, with gains broadening beyond the mega-cap technology names that have dominated much of this year’s rally. Small caps also outperformed, with the Russell 2000 climbing almost 1%.
Markets appeared encouraged by signs negotiations between the US and Iran may be progressing, even though both sides continue signalling major disagreements remain unresolved.
At the same time, investors largely shrugged off another sharp deterioration in US consumer confidence data and more hawkish comments from Federal Reserve governor Christopher Waller, who warned inflation was “not headed in the right direction”.
Bond markets reflected some of that caution. Short-term US yields moved higher as traders scaled back expectations for interest-rate cuts, though longer-dated yields eased slightly by Friday’s close.
Oil falls sharply as diplomacy hopes grow
Energy markets were the major focus heading into the new week after crude prices tumbled on renewed hopes of a diplomatic breakthrough in the Middle East.
WTI crude fell below US$100 a barrel in early Monday trade, while Brent also dropped heavily as traders reduced some of the supply-risk premium built into oil markets during recent weeks.
The move followed comments from President Donald Trump suggesting a framework for a US-Iran agreement had largely been negotiated, though officials later stressed key issues still need resolving.
Markets are increasingly betting that even partial progress could reduce immediate risks around oil supply and shipping through the Strait of Hormuz.
Commodities and currencies
Commodity markets delivered a mixed picture overnight.
- Copper continued climbing on optimism around AI infrastructure and electrification demand, up about 1.4%
- Gold rebounded toward US$4,520/oz as investors balanced lower oil prices against geopolitical uncertainty
- Silver fell nearly 1.7% to US75/oz
Lithium and strategic minerals stocks also performed strongly in US trade, suggesting resources sentiment may remain relatively supportive locally despite softer oil prices.
The Australian dollar strengthened to around US71.6 cents as the US dollar weakened modestly.
Miners lead ASX rebound
Locally, Friday’s recovery was driven largely by renewed buying across the resources sector.
Copper and diversified miners rallied after UBS lifted its long-term copper forecasts and highlighted growing demand tied to electrification, power infrastructure and data centre expansion.
South32, Sandfire Resources, Rio Tinto and BHP all finished higher, while lithium names also rebounded strongly after several volatile weeks.
Uranium stocks regained ground after broker upgrades for Paladin Energy and Boss Energy improved sentiment across the sector.
Elsewhere, banks edged higher, while communication services remained under pressure following renewed weakness in Telstra, SEEK and REA Group.
What’s happening today
With US markets closed tonight for Memorial Day, trading volumes may remain lighter than usual.
Locally, attention is already turning towards Wednesday’s monthly CPI data, which could influence expectations around the RBA’s next move after softer Australian labour market figures last week.
Investors will also continue monitoring developments around US-Iran negotiations, with oil prices and bond yields still driving much of the broader market mood.