The Australian sharemarket is expected to open weaker on Wednesday as renewed violence around the Strait of Hormuz and growing concern over stretched AI valuations weigh on investor sentiment.
Futures markets are pointing to a 20-point, or 0.23%, fall in the S&P/ASX 200 at the open.
The latest pressure follows reports that three tankers were hit in the Strait of Hormuz on Tuesday, raising fresh concerns about energy security and global shipping flows through one of the world’s most important oil and gas transit routes.
The attacks come as investors were already reassessing high-flying AI and semiconductor stocks after another volatile session on Wall Street.
ASX resumes decline
The local market fell on Tuesday after a container ship in the Strait of Hormuz was hit by a projectile, testing a fragile truce between the US and Iran.
The S&P/ASX 200 dropped 27.1 points, or 0.31%, to 8,803.9, while the broader All Ordinaries lost 32.3 points, or 0.36%, to 9,004.7.
The materials sector was the biggest drag, extending early losses to more than 2.6% by the close as oil price pressure and renewed global growth concerns hit risk appetite.
Gold stocks were also sold down, with the All Ordinaries gold sub-index falling more than 4% as gold eased to US$4,124 an ounce. The move handed back some of the metal’s recent gains after a weaker US jobs report had encouraged less hawkish commentary from new US Federal Reserve chairman Kevin Warsh.
Major miners were also under pressure as copper and iron ore prices softened. BHP fell 1.9%, while Rio Tinto lost 1.8%.
Banks and technology stocks helped limit the broader market decline, with financials rising more than 1% and the IT sector gaining more than 2%.
Westpac led the major banks, up 2.4% to $36.13, as the financial sector rose to its highest level since May 11.
IG market analyst Tony Sycamore said crude markets appeared to be pricing in limited escalation, but miners and gold stocks were still under heavy selling pressure.
“When you look at what is happening with the crude oil price, it seems to be fairly comfortable that nothing too inflammatory is going to come out of the news today, but then you look at the big miners and the gold stocks, and they’re being absolutely pummelled,” Sycamore said.
Wall Street slips as chip stocks retreat
US sharemarkets closed lower on Tuesday as investors pulled back from chipmakers amid growing doubts about the sustainability of Wall Street’s AI-driven rally.
The sell-off followed Samsung Electronics (KRX:005930, LSE:BC94)’ strong earnings report, which still failed to meet the lofty expectations built into semiconductor stocks.
Micron fell almost 5% and SanDisk dropped more than 7%, helping drag the Philadelphia Semiconductor Index down 4.7%.
Sentiment was also hit by a Reuters report that Chinese start-up DeepSeek was developing its own AI chip, potentially reducing its reliance on Nvidia and Huawei hardware.
While the S&P 500 declined, most of its 11 sectors finished higher, led by a 3% rise in energy stocks as oil prices climbed.
SpaceX fell almost 7% in its first day of trading as part of the Nasdaq 100 index, while Fiserv gained 1.8% following reports it had held talks with major US banks, including JPMorgan and Bank of America, about selling its debit card payments infrastructure business.
The Dow Jones finished down 0.3%, the S&P 500 fell 0.5% and the Nasdaq lost 1.2%.
US Treasury yields rose as investors monitored geopolitical tensions and prepared for a heavy slate of government bond auctions.
The US 10-year Treasury yield added 7 basis points to 4.55%, while the 2-year yield rose 5 basis points to 4.18%.
European markets mostly lower
European sharemarkets mostly slipped on Tuesday as the global tech sell-off weighed on sentiment.
Investors also monitored the NATO summit for signals on which sectors could benefit from increased defence spending, although defence stocks still fell 2.5%.
Technology shares were the main drag, dropping 3.6% on concerns that the recent rally in chip stocks had pushed valuations too far. Chip equipment maker ASML fell 7.3%, while Siemens Energy tumbled 8.9% after a broker downgrade.
The continent-wide FTSEurofirst 300 index ended 0.7% lower, while the UK’s FTSE 100 edged 0.1% higher.
Currencies mixed
Currencies were mixed against the US dollar.
- The euro eased 0.2% to US$1.1414.
- The Japanese yen was steady at JPY162.07.
- The Australian dollar dipped 0.3% to US69.29 cents.
Oil rises as Hormuz risks return
Global oil prices rose after reports of attacks on vessels near the Strait of Hormuz revived fears of disruption to shipping through the critical energy transit route.
Brent crude futures settled 3% higher at US$74.16 a barrel after reports that a Qatari LNG tanker and a Saudi-flagged crude oil tanker were damaged near the waterway.
Base metals were mixed.
- Copper futures slipped 0.1%, while aluminium futures gained 0.7% amid Middle East tensions and continued inventory outflows.
- Gold futures edged lower as investors awaited minutes from the US Federal Reserve’s June meeting for further guidance on the interest rate outlook. Gold settled 0.2% lower at US$4,157 an ounce.
- Iron ore futures were relatively steady, down 0.3% to US$98.02 a tonne.
Looking ahead
In Australia, May building approvals are due today, while RBA Assistant Governor Sarah Hunt will deliver a speech in Canberra.
In the US, investors will focus on the release of the Federal Reserve’s June 17 policy meeting minutes.