Australian shares are set for a weaker start, with ASX futures pointing to a decline after US markets fell sharply overnight amid renewed geopolitical tensions in the Middle East and growing anticipation around SpaceX's trading debut.
ASX 200 futures were down 65 points, or 0.8%, to 8,601, indicating a softer open after the benchmark index posted solid gains in the previous session.
ASX gains as investors seek defensive sectors
The S&P/ASX 200 closed 49.1 points higher on Wednesday, up 0.57% to 8,653.3, with eight of 11 sectors ending in positive territory.
Defensive sectors led the advance as investors rotated into supermarket, healthcare, real estate and utility stocks amid renewed hostilities between the US and Iran. Consumer staples was the standout performer, with Coles climbing 5% to $23.73 and Woolworths gaining 3.2% to $37.63.
CSL also attracted strong buying interest, reclaiming the $100 mark and extending its recovery to more than 14% from its early June low.
Wesfarmers rose 4.3% to $83.39 after outlining growth plans centred on artificial intelligence and data monetisation during its strategy day.
Resource stocks weighed on the market, particularly gold producers, after bullion fell to its lowest level since November.
Wall Street extends losses as tech stocks retreat
US markets finished sharply lower as technology stocks came under renewed pressure and investors assessed escalating tensions between Washington and Tehran.
The Dow Jones Industrial Average fell 1.9%, while the S&P 500 declined 1.6% and the Nasdaq lost 2%.
Technology and artificial intelligence-linked stocks led the sell-off. Nvidia dropped 3.7%, Tesla lost 3.8%, while Micron and Broadcom fell between 3.7% and 5.1%. Amazon, Alphabet and Meta Platforms each declined more than 2%. Apple was the only member of the "Magnificent Seven" to finish higher, rising 0.4%.
Super Micro Computer plunged 28% after unveiling plans to raise US$7 billion through equity and equity-linked financings to support growing AI server demand.
Investor attention also remained firmly fixed on the upcoming SpaceX IPO, which is expected to begin trading on Friday.
Fundstrat Global's Tom Lee said the offering was likely drawing capital away from broader equity markets, noting the IPO was already oversubscribed four times and could reach eight to 10 times oversubscribed by launch.
Vanda Research said retail investors were already rotating out of recent AI favourites ahead of the expected wave of IPO activity, warning that retail selling, institutional profit-taking and systematic fund flows remained key downside risks.
Energy stocks were among the few gainers on Wall Street as oil prices moved higher.
European markets tread water ahead of ECB decision
European markets ended little changed as investors weighed the latest Middle East developments and awaited the European Central Bank's interest rate decision.
The pan-European FTSEurofirst 300 index slipped 0.1%, while the UK's FTSE 100 gained 0.3%.
Mining and industrial stocks led declines, both falling more than 1%, while technology stocks lost 0.7%.
Norwegian defence and technology group Kongsberg dropped 5% after disappointing margin guidance.
Bond yields edge higher after inflation data
US Treasury yields rose modestly after inflation data showed core consumer prices increased less than expected in May.
The headline consumer price index rose 0.5% for the month, lifting annual inflation to 4.2%. Core inflation, which excludes food and energy, increased 0.2% in May and 2.9% over the year, both below market expectations.
The US 10-year Treasury yield rose 2 basis points to 4.55%, while the 2-year yield gained 2 basis points to 4.14%.
Currencies mixed against the US dollar
- Currency markets were relatively subdued.
- Euro: unchanged at US$1.1538
- Japanese yen: down 0.1% to ¥160.53 per US dollar
- Australian dollar: down 0.4% to US69.97 cents
Oil rallies while gold tumbles
Oil prices climbed after President Donald Trump warned the US would attack Iran "very hard" if a peace agreement is not reached, while a larger-than-expected drawdown in US crude inventories also supported prices.
Brent crude rose 2% to settle at US$93.10 a barrel.
Base metals weakened amid concerns that escalating Middle East tensions could weigh on global economic growth.
- Copper fell 0.8% to a three-week low, while aluminium dropped 2.6%.
- Gold futures slumped 3.6% to US$4,133 an ounce as investors worried that rising geopolitical risks and higher energy prices could fuel inflation and keep interest rates elevated.
- Iron ore was steadier, edging up 0.3% to US$101.70 a tonne.
Looking ahead
Investors will be watching several key economic releases over the next 24 hours.
In Australia, the Melbourne Institute's inflation expectations survey is due.
In the US, producer price index (PPI) data and weekly jobless claims will be released.
In Europe, the European Central Bank is expected to leave interest rates unchanged at 2.15%.