Australian shares are expected to open lower today, despite a technology-led rebound on Wall Street that pushed the S&P 500 almost 2% higher.
ASX 200 futures were down 51 points, or 0.6%, to 8,854, pointing to a weaker start for the local benchmark.
The softer lead comes as investors weigh renewed strength in the US dollar, shifting expectations for US interest rates and easing oil supply concerns after shipping resumed through the Strait of Hormuz.
Oil prices fell as traders priced in improved conditions across key Middle East shipping routes, while bond markets stabilised after recent volatility linked to the US Federal Reserve’s outlook.
ASX falls as miners and tech stocks drag
The Australian sharemarket fell on Thursday after US Federal Reserve policymakers signalled a potential rate increase later this year, pressuring metals prices and weighing on mining stocks.
The S&P/ASX 200 Index dropped 55.2 points, or 0.6%, to 8,911.1, with 7 of the 11 sectors finishing in the red after a choppy session in which early gains were quickly erased.
Mining stocks were sold off as higher US interest rate expectations weighed on gold and copper, while iron ore prices softened on weaker Chinese economic data.
“We did see a pretty hawkish sounding [Fed] overnight, and I do feel that the ASX 200 has really struggled to swim against the tide of higher rates,” IG market strategist Tony Sycamore said.
“It is significant as it has weighed on our big mining stocks with gold and copper all down because the prospect of higher rates is bad news for base metals, while it is also feeling the pinch from falling iron ore prices from soft Chinese economic data.”
Gold names were among the weakest performers, with Ora Banda Mining down 7.5% to $1.29, Pantoro Gold falling 6.7% to $2.85 and Northern Star Resources easing 1.6% to $21.50.
Iron ore in Singapore fell to a fresh multi-month low of about US$99 per tonne, sending BHP 0.8% lower to $65.04 and Fortescue down 1.7% to $19.97.
Rate-sensitive technology stocks also came under pressure. WiseTech Global fell 3.4% to $37 and Xero lost 3.9% to $71.64.
Energy stocks were weaker as Brent crude dropped 2.8% to US$77.33 following the signing of an interim peace deal between the US and Iran, which traders hope will support oil flows through the Strait of Hormuz. Woodside Energy lost 1.2% to $28.62.
Banks were mixed. ANZ and Macquarie both rose 0.3% to $35.14 and $252.78 respectively, while Commonwealth Bank fell 0.6% to $162.23, National Australia Bank dropped 0.9% to $37.34 and Westpac declined 1.1% to $35.16.
Wall Street rebounds as chipmakers surge
US equity markets closed higher overnight as investors used lower energy prices and the previous session’s hawkish Federal Open Market Committee sell-off as an opportunity to buy the dip.
Technology stocks led the advance, with chipmakers hitting record highs.
Intel surged 10.64% to US$133.99 after US President Donald Trump said Apple would work with the company on US-made chips. Micron Technology jumped 8.70% to US$113.99, while AMD and Broadcom each gained more than 4%.
The rebound helped lift the S&P 500 by nearly 2%, while the Nasdaq 100 is set to finish the holiday-shortened week up 2.60%. The S&P 500 is up 0.93% for the week and the Dow Jones has gained 363 points, or 0.71%.
US markets will be closed tonight for the Juneteenth National Independence Day holiday.
Despite the rally in semiconductor stocks, momentum across the Magnificent 7 has eased in recent weeks. Amazon and Nvidia are trading about 12% below recent record highs, while Microsoft and Meta remain close to their March lows.
Investors continue to assess stretched valuations, capital expenditure expectations, post-Middle East uncertainty, a more hawkish Fed and the approach of the US mid-term political cycle.
In economic data, US initial jobless claims fell to 226,000 last week, broadly in line with expectations, while continuing claims rose by 24,000 to 1.81 million, the highest level in nearly 3 months.
The US rates market is now fully priced for a 25-basis-point Fed rate rise by October, with 2 rate rises almost fully priced by March 2027.
European markets watch rates, energy and geopolitics
European markets remain sensitive to the same themes driving global trade: US interest rate expectations, energy prices and the fragile Middle East truce.
The pullback in oil offered some relief to inflation-sensitive sectors, but the stronger US dollar and higher-for-longer rate outlook kept investor sentiment cautious.
The renewed focus on US monetary policy also pressured risk appetite across global markets, particularly in cyclical and commodity-linked sectors.
Currencies: US dollar strengthens after Fed
The US dollar extended its post-FOMC gains, with the DXY appearing to break higher.
- AUD/USD finished broadly flat at US$0.7014, up 0.02%, after briefly dropping below US70¢ before rebounding.
- EUR/USD finished 0.38% lower at US$1.1457 as the greenback strengthened. The pair is now moving towards key support around US$1.1410 to US$1.1390, which it needs to hold to prevent a deeper pullback towards US$1.1000.
- USD/JPY rose 0.45% to ¥161.41, putting the pair within range of the 2024 high of ¥161.95.
Commodities: oil falls on Hormuz restart, gold pressured by rates
Oil prices eased as shipping activity resumed through the Strait of Hormuz, reducing concerns over disruption to global energy supplies.
West Texas Intermediate crude finished 0.68% higher overnight at US$75.52 after rebounding from an intraday low of US$72.83, snapping a 5-session losing streak.
The low came after the US and Iran signed a memorandum of understanding earlier than expected, with the agreement triggering some relief, including the lifting of a US naval blockade and reports of tankers resuming passage through the Strait of Hormuz.
However, the situation remains fragile.
Fresh Israeli airstrikes and drone operations against Hezbollah in southern Lebanon have raised questions over whether the truce can hold, particularly given the agreement’s call for a permanent end to the conflict in Lebanon and respect for Lebanese sovereignty.
WTI crude has tested and held a critical support band between US$75.00, the 200-week moving average, and US$73.50, the 200-day moving average.
Gold finished 1.14% lower at US$4,208, extending its pullback from this week’s high of US$4,382.
The decline followed the hawkish FOMC meeting, which strengthened the US dollar and reinforced expectations of a Fed rate rise before year-end — a clear headwind for the precious metal.
The rebound from last week’s US$4,023 low has raised the prospect that a short-term, and possibly medium-term, low is in place. Confidence in that view would increase if gold can reclaim downtrend resistance near US$4,410 and the 200-day moving average at US$4,463.
Until then, a retest of the October 2025 low at US$3,886 remains possible.