Australian shares are expected to open slightly higher on Monday, with futures pointing to a 0.2% gain for the S&P/ASX 200 at the opening bell, as the local market looks to build on Friday’s positive close.
However, the mood remains cautious. Two days of US strikes on Iran, in retaliation for an apparent strike on a container ship travelling through the Strait of Hormuz, have threatened a fragile ceasefire agreement and reignited concerns about energy supply disruption.
Australian traders are also watching weakness on Wall Street, where the S&P 500 ended last week down 2% and the Nasdaq fell 4.5%, as investors questioned whether artificial intelligence-focused companies can deliver returns strong enough to justify heavy capital spending.
Emanuel Datt, chief investment officer at Datt Capital, said geopolitics had moved to the front of investors’ minds.
“All eyes will be on the Middle East, and probably more focused towards the tangible instead of the AI theme,” he said, although his team remained “fairly positive” on the outlook for the ASX from the end of this week.
New financial year may bring seasonal support
The new financial year begins on Wednesday, marking the end of the ASX’s regular tax-loss selling season, when investors typically offload underperforming stocks to offset capital gains elsewhere.
“We always notice significant strength in the market from July going through to probably August and September,” Datt said.
“A lot of that is people – whether they’re professional investors or retail investors – like to clear their decks in preparation for the new financial year.”
Even so, interest rate concerns remain firmly in focus. Minutes from the Reserve Bank of Australia (RBA)’s June monetary policy meeting, due this week, will be closely watched for clues on how the board is assessing current economic conditions and whether further rate rises may be required to control inflation.
RBA Assistant Governor Christopher Kent is also scheduled to speak in Sydney today, while several major companies trade ex-dividend, including Goodman Group (ASX:GMG), Mirvac, GPT and APA Group (ASX:APA).
ASX closes higher as miners and defensives support gains
Australian shares finished higher on Friday, supported by a recovery in miners and a rotation into defensive sectors.
The S&P/ASX 200 Index rose 15.5 points, or 0.2%, to 8764.2, with seven of the 11 sectors ending in positive territory. For the week, the benchmark index fell 0.7%.
Miners helped underpin the session as commodity prices stabilised. Gold rebounded above US$4,000 an ounce, despite remaining on track for a fourth straight weekly decline, after softer-than-expected US Personal Consumption Expenditures inflation data eased expectations for further US interest rate rises.
“The local market has been pressured this week by a fresh round of profit warnings, and weakness in key commodity prices including iron ore, copper, and gold, in reaction to last week’s hawkish [Federal Open Market Committee]meeting,” IG senior market strategist Tony Sycamore said.
Resolute Mining rose 3.6% to $1.01, Westgold gained 3.4% to $4.83 and Newmont added 1.5% to $136.33.
BHP edged 0.8% higher to $58.99 as the company reshaped its leadership structure ahead of Brandon Craig taking over as chief executive. The role of president Americas will be split into North America and South America.
Rio Tinto climbed 2.2% to $173.64 after Bloomberg reported the miner was in talks with Vitol to establish a freight joint venture.
Defensive names also found support. APA Group rose 1.3% to $10.77, while Coles added 1.5% to $24.41, taking its monthly gain to almost 15%.
Tech lags as AI concerns pressure sentiment
Technology stocks were the weakest performers on Friday, tracking losses across Asia as pressure built across the global tech trade.
South Korea’s Kospi index dropped 7% amid renewed weakness in Apple-linked names and reports OpenAI may delay its public listing.
Locally, NextDC fell 4.5% to $14.06 and TechnologyOne slipped 1.1% to $28.87.
Financials were mixed. Commonwealth Bank eased 0.4% to $162.02, while National Australia Bank, ANZ and Westpac gained between 0.2% and 0.5%.
Judo Capital fell a further 3.8% to 88 cents after plunging a record 40% on Thursday, as analysts downgraded the stock following a profit warning.
Wall Street slips as chip stocks drag
US sharemarkets ended marginally lower on Friday, weighed down by a steep fall in AI-related chip stocks, although healthcare names provided some support.
Eight of the 11 S&P 500 sectors finished lower, led by industrials, which fell 3.4%, and materials, down 2.5%.
The chip index tumbled 5.3%, highlighting renewed volatility among AI-linked semiconductor stocks that have been central to Wall Street’s recent rally.
Sandisk fell 10%, Seagate Technology sank 12% and Western Digital dropped 13%. ON Semiconductor slumped almost 24% after agreeing to acquire Synaptics in an all-stock deal valued at about US$7 billion. Synaptics dipped 3.7%.
Apple rallied 3.1%, partially recovering from Thursday’s sell-off after raising prices on iPads and MacBooks, citing higher memory and storage chip costs.
Moderna surged almost 13% to its highest level since 2024 after the drug developer hosted an investor event and outlined its pipeline.
The Dow Jones Industrial Average finished down 0.1%, the S&P 500 slipped 0.1% and the Nasdaq lost 0.2%.
US government bond yields were steady as investors weighed the likelihood of another Federal Reserve rate hike. The US 10-year Treasury yield was flat at 4.38%, while the two-year yield fell one basis point to 4.10%.
The key US economic release this week will be June jobs figures, due on Thursday.
Europe pulls back from records
European sharemarkets retreated from record highs on Friday, with technology stocks tracking broader global weakness.
The technology sector fell 1.2%, with chipmakers Infineon and STMicroelectronics (NYSE:STM) each down 4.5%. AI equipment maker Schneider Electric lost 1.3%.
Telecom names were also weaker, with Ericsson down 1.7% and Nokia falling 6.5%.
Shares in Zalando slid 6.3% after Germany’s financial regulator launched an investigation into the online fashion retailer’s 2025 financial statements, citing evidence of possible accounting regulation breaches. The broader retail sector fell 1.6%.
Volkswagen rose 3.9% following reports the automaker is targeting up to 100,000 job cuts over the next few years.
In London, Wise climbed 9.6% after the money transfer company reported strong customer growth and announced a US$500 million share buyback.
The continent-wide FTSEurofirst 300 index ended down 0.7%, while the UK’s FTSE 100 dipped 0.2%.
Currencies mixed
Currencies were mixed against the US dollar.
- The euro was flat at US$1.1380.
- The Japanese yen was steady at ¥161.76.
- The Australian dollar slipped 0.1% to US68.85 cents.
Oil falls as tankers continue through Hormuz
Global oil prices fell as tankers continued to exit the Strait of Hormuz, easing some immediate supply concerns after a cargo vessel was hit near Oman.
- Brent crude futures settled 4.3% lower at US$71.99 a barrel.
Base metals were stronger on Friday, supported by a softer US dollar and lower inventories.
- Copper futures rose 1.2%, while aluminium futures added 1.4%.
- Gold futures gained as the US dollar weakened, settling 1.2% higher at US$4,096 an ounce.
- Iron ore futures were flat at US$100.33 a tonne, although the steelmaking commodity still recorded its first weekly gain in almost two months.