The ASX is set for a weaker start on Tuesday, with futures down 42.7 points (-0.49%) at 9:20 am AEST despite another record-setting session on Wall Street overnight.
Investors are weighing strong momentum in AI and technology stocks against renewed uncertainty in the Middle East after conflicting signals emerged around the future of US-Iran negotiations. A sharp rise in oil prices and firmer bond yields appear set to dominate sentiment locally.
Wall Street keeps climbing
US markets started June on a positive note, with the S&P 500, Nasdaq and Dow Jones all finishing at fresh record highs.
Technology stocks again did much of the heavy lifting. Nvidia surged more than 6% after unveiling a new AI-focused PC chip, helping drive gains across parts of the semiconductor and software sectors. Arm Holdings also rallied strongly, while enterprise software names extended their recent recovery.
The broader picture was less convincing. Technology and energy were the only sectors to finish higher, while small caps retreated and most defensive sectors closed lower.
Economic data also remained supportive. The latest US manufacturing survey pointed to the strongest factory expansion in four years, suggesting industrial activity continues to hold up despite higher interest rates and ongoing geopolitical uncertainty.
Oil jumps as Middle East tensions return to focus
Energy markets were once again at the centre of attention overnight.
Crude prices surged after reports Iran had suspended negotiations with the United States and signalled it could move to disrupt additional shipping routes. Brent crude briefly topped US$97 a barrel before easing back, while WTI still finished almost 6% higher.
Markets later received more encouraging comments suggesting diplomatic channels remain open, but uncertainty around the situation continues to inject volatility into energy and bond markets.
The move higher in oil also pushed bond yields higher as investors reassessed inflation risks. US Treasury yields finished modestly higher after swinging sharply throughout the session.
Commodities and currencies
Commodity markets were mixed overnight.
- Copper climbed almost 3%, extending its recent rally as investors focused on tightening supply and growing demand linked to electrification and AI infrastructure.
- Aluminium rose to fresh four-year highs.
- Gold fell as higher yields reduced demand for defensive assets.
The Australian dollar slipped back towards US71.6 cents as the US dollar strengthened amid the geopolitical uncertainty.
Tech strength offsets weakness on the ASX
The ASX 200 finished virtually unchanged on Monday, ending down just 0.03% after recovering from steeper losses earlier in the session. The Small Ordinaries added 0.27%.
Technology stocks led the market higher, with the ASX All Technology Index surging 5.4% in its strongest session since April. Gains were broad-based across software and digital infrastructure names as investors responded to renewed enthusiasm for AI-related stocks globally.
Materials and energy also finished higher. BHP closed at another record high, while copper-linked stocks benefited from improving sentiment around the metal's long-term demand outlook.
Elsewhere, healthcare was the weakest major sector, while financials and real estate also struggled.
What's on the radar today
Investors will have a busy local economic calendar to navigate ahead of Wednesday's GDP release.
The Fair Work Commission's annual wage decision, a speech from RBA board member Ian Harper and a batch of economic indicators including company profits, inventories, the current account and building approvals are all due today.
In light early news flow from juniors, St George Mining Ltd (ASX:SGQ, FRA:S0G, OTC:SGQMF) says battery maker Amperex Technology Limited (ATL) will become a shareholder through a restructure of the Lithium Star joint venture. ATL will take a strategic stake at a 36% premium to the company's 30-day VWAP, gaining exposure to the Araxá niobium-rare earths project while retaining future lithium offtake rights.
Markets will also continue watching developments in the Middle East, where oil prices remain highly sensitive to any shift in the diplomatic outlook.
After another strong night for US technology stocks, local investors may again find themselves balancing enthusiasm around AI and software names against the broader risks posed by rising energy prices, higher bond yields and an increasingly uncertain geopolitical backdrop.