The ASX is expected to open lower today after Wall Street weakened in response to the US Federal Reserve’s first policy meeting under newly appointed chair Kevin Warsh.
ASX futures were down 61 points, or 0.7%, to 8,892 at the close of New York trading, pointing to a weaker start for the local market.
Traders moved quickly to price in a US interest rate rise by October after the Fed left rates unchanged for a 4th consecutive meeting but signalled that tighter policy may still be ahead.
Half of Fed policymakers indicated they expected a rate rise later in 2026, sending US Treasury yields sharply higher and supporting the US dollar.
The Australian dollar fell 0.7% to US70 cents.
ASX hits highest level since April
Australian shares advanced to their highest level since April on Wednesday, supported by gains in BHP, gold stocks, technology shares and travel companies.
The S&P/ASX 200 Index rose 48.6 points, or 0.5%, to 8,966.3 — its best close since April 15.
The market was helped by a sharp fall in oil prices, with Brent crude touching a 3-month low near US$79 a barrel as investors weighed the potential reopening of the Strait of Hormuz and easing Middle East tensions.
US President Donald Trump said the Strait of Hormuz could fully reopen by Friday, a move that could reduce pressure on global energy prices and inflation expectations.
SPI Asset Management managing partner Stephen Innes said the move in oil prices challenged the inflation narrative that had been driving markets and central bank thinking.
“If expectations for the Strait of Hormuz’s reopening keep dragging the energy premium lower, the market will start stripping out the inflation shock it was only just beginning to price back in,” Innes said.
Tech, gold and travel stocks lead gains
Interest rate-sensitive technology stocks were among the strongest performers on the ASX.
WiseTech Global rose 4.1% to $38.30, while Xero gained 3.5% to $74.58.
Materials also provided support, with gold steadying around US$4,330 an ounce after rising 2.2%. Newmont climbed 2.7% to $154.25, Pantoro Gold gained 8.2% to $3.05 and Regis Resources advanced 5.4% to $7.05.
BHP added 0.6% to a record $65.59 as aluminium and copper prices gained, while Fortescue fell 1.1% to $20.32 after iron ore in Singapore slipped below US$100 a tonne for the 1st time since March.
Travel stocks rallied after the Federal Government removed its “do not travel” advice for several Middle Eastern countries, clearing the way for Australians to transit or visit the region without voiding travel insurance.
Web Travel surged 11.1% to $3.01, SiteMinder climbed 10.1% to $4.25 and Flight Centre rose 5.3% to $12.44, despite issuing a profit downgrade to between $275 million and $295 million for the financial year.
Financials were mixed. Macquarie rose 1.2% to a record $251.93, Commonwealth Bank gained 1.1% to $163.71 and ANZ added 0.6% to $35.05, while National Australia Bank and Westpac each fell around 0.5%.
Energy was the weakest sector as oil prices softened. Woodside Energy dropped 3.6% to $28.96, its lowest level since before the Iran war, Santos fell 1.2% to $7.36 and Karoon Energy lost 13.4% to $1.42, taking its weekly decline to 30%.
Wall Street falls after Fed decision
US sharemarkets fell after the Federal Reserve left interest rates unchanged but signalled that a rate hike could be delivered later this year.
The Dow Jones Industrial Average finished down 1%, the S&P 500 lost 1.2% and the Nasdaq Composite declined 1.3%.
All 11 S&P 500 sectors closed lower, led by communication services and consumer discretionary, which fell 3% and 2.7% respectively.
The Philadelphia semiconductor index was the standout, rising 1.4%, with Broadcom up 4.3% and Intel gaining 3.5%.
Among individual stocks, Robinhood rose 9% after the online trading platform cut 10% of its workforce.
CME Group slipped 3.5% after the exchange operator said chief executive Terry Duffy would step down on March 1 and transition to executive chairman.
Allbirds soared 39% after the footwear maker-turned-AI company changed its name to Smartbird and appointed a former Amazon executive as chief executive.
US government bond yields jumped after the Fed’s rate outlook and stronger-than-expected retail sales data.
Retail sales rose 0.9% last month, well ahead of forecasts. The US 10-year Treasury yield rose 6 basis points to 4.49%, while the 2-year Treasury yield climbed 14 basis points to 4.19%.
European markets edge higher
European sharemarkets edged higher on Wednesday as investors awaited further details on the US-Iran peace agreement and the Federal Reserve’s policy outlook.
The continent-wide FTSEurofirst 300 Index ended 0.6% higher, while the UK’s FTSE 100 rose 0.1%.
Banks supported the broader market, advancing 1.9%, while technology stocks climbed 1.5%. Aixtron rose 6.7%.
Auto stocks were the weakest performers, falling 3.3% in their biggest 1-day decline in nearly a month.
BMW dropped 8.3% after the premium carmaker lowered its annual profit outlook, citing weakness in China and the impact of the US-Iran war.
Currencies
Currencies weakened against the US dollar as markets priced in higher US interest rates.
- The euro fell 0.6% to US$1.1495.
- The Japanese yen slipped 0.2% to ¥160.70.
- The Australian dollar dropped 0.8% to US70.12 cents.
Commodities
Global oil prices rose after Trump said the ceasefire agreement with Iran was not final and that the war could resume if he was unsatisfied, although concerns about excess supply next year limited gains.
Brent crude futures settled 0.7% higher at US$79.55 a barrel.
The International Energy Agency said US crude inventories fell for a 10th straight week as demand surged, taking total stockpiles to their lowest level since 1985.
Base metals were mixed.
- Copper futures were little changed, down 0.1%, while aluminium futures advanced 0.8% as bargain hunters stepped in after recent falls.
- Gold futures rose after the Fed meeting, settling 0.6% higher at US$4,381 an ounce.
- Iron ore futures fell 0.4% as heavy rain in China weighed on demand for steel and steelmaking ingredients.
Looking ahead
In the US, investors will watch the Philadelphia Fed business outlook for June and the Conference Board leading index for May.
In the UK, the Bank of England will make its latest interest rate decision, with markets expecting rates to remain steady at 3.75%.