The ASX is set for a weaker open on Thursday, with futures down 87 points (-0.99%) at 9:20 am AEST after rising oil prices, higher bond yields and renewed tension in the Middle East weighed on global markets overnight.
The softer lead comes after a strong session locally on Wednesday, when the ASX 200 rose 0.7% as investors piled back into miners, energy stocks and banks following weaker-than-expected Australian GDP data.
Wall Street pauses after record run
US shares retreated overnight, ending a powerful rally that had carried major benchmarks to a string of record highs.
The S&P 500 fell 0.74%, the Nasdaq lost 0.89% and the Dow Jones dropped 1.21%, with selling broadening beyond technology stocks as investors adopted a more defensive stance.
Energy, healthcare and consumer staples were among the few sectors to finish higher, while technology, financials and consumer discretionary stocks led the declines.
The shift in mood came as investors digested another escalation in the US–Iran conflict, alongside signs that higher energy costs are beginning to complicate the inflation outlook.
Economic data remained relatively supportive. US services activity expanded at its fastest pace in three months, while employment indicators continued to point to a labour market that is slowing only gradually.
Oil and geopolitics back in focus
The dominant theme overnight was another sharp move in energy markets.
Oil prices pushed higher after reports of fresh military exchanges involving US and Iranian forces, including attacks in Bahrain and Kuwait and further action around the Strait of Hormuz. While both sides have continued to signal a willingness to negotiate, markets appear increasingly sceptical that a lasting agreement is close.
WTI crude rose above US$96 a barrel, while Brent approached US$98 as traders priced in the risk of further disruption to global energy flows.
The move also flowed through to bond markets, with Treasury yields climbing as investors reassessed the inflation implications of higher fuel prices.
Commodities and currencies
Commodity markets were generally weaker overnight, particularly across metals.
- Copper fell almost 3% after a strong recent run.
- Gold eased around 1% as bond yields moved higher.
- Iron ore also weakened, while most mining-related ETFs finished lower.
The pullback could weigh on local resource stocks after a strong performance in recent sessions, particularly among copper, uranium and precious metals names.
The Australian dollar was little changed near US71.3 cents.
Resources lead ASX higher
Wednesday's local session was driven by a renewed rotation into resources and energy stocks.
Materials and energy were the standout sectors, with investors responding positively to softer GDP figures that reinforced expectations the RBA may remain cautious on further rate increases. Banks also contributed to the advance, helping lift the benchmark to its highest level in several weeks.
Technology stocks gave back some of Tuesday's gains, while healthcare remained under pressure following the fallout from Opthea's failed late-stage clinical trial earlier in the week.
The Small Ordinaries finished little changed, reflecting a more selective approach towards risk assets beneath the headline index strength.
What's on the radar today
Attention locally will turn to April trade data and a scheduled appearance by RBA Governor Michele Bullock before the Senate Economics Legislation Committee.
Investors will also continue assessing the implications of Wednesday's softer GDP report, which showed the Australian economy expanding by just 0.3% in the March quarter as higher living costs and weaker exports weighed on growth.
In company news, PRO MEDICUS LIMITED (ASX:PME) announced a five-year, $16 million contract renewal with Ohio State University Wexner Medical Centre, extending a long-standing relationship with one of the largest academic medical centres in the United States.
For now, markets remain caught between resilient economic data and strong AI-driven investment trends on one side, and rising energy prices and geopolitical uncertainty on the other. Thursday's weaker futures suggest the latter is likely to dominate sentiment at the open.