Australian shares are expected to fall on Thursday as renewed hostilities in the Middle East, higher oil prices and weakness across global equity markets weigh on investor sentiment.
Futures at 6am AEST pointed to a 50-point slide, or 0.57%, for the benchmark S&P/ASX 200 at the open.
The Australian dollar was buying US69.38 cents, slightly higher than US69.32 cents at the same time on Wednesday.
Local market stages late recovery
The local sharemarket staged a sharp turnaround on Wednesday, finishing only modestly lower after earlier being on track for its worst session in five weeks.
The S&P/ASX 200 was down as much as 127 points, or 1.4%, in the first hour of trade before steadily recovering through the afternoon to close 18.8 points lower at 8,785.1, a fall of 0.2% from Tuesday’s close.
The All Ordinaries lost 25.4 points, or 0.28%, to finish at 8,979.3.
The rebound came despite Iran saying it had launched attacks on 85 US military sites in Bahrain and Kuwait in response to US airstrikes targeting Iranian ports, missile and drone sites and air defences.
The US said its “powerful” strikes were retaliation for Iran’s alleged targeting of two tankers in the Strait of Hormuz.
IG analyst Tony Sycamore said the renewed conflict highlighted how the June 17 memorandum of understanding between the US and Iran had left key details around control of the Strait of Hormuz deliberately ambiguous.
Energy stocks surge as oil jumps
Oil prices climbed sharply, with Brent crude rising US$3 to a two-week high of US$76.63 a barrel, helping propel the ASX energy sector 3.3% higher.
Woodside Energy gained 3.2%, Santos advanced 5.8% and Yancoal added 4%.
Six of the ASX’s 11 sectors finished higher, while five closed in the red.
Telstra fell 3% to a near five-month low of $4.92 as the telecommunications giant dealt with a major mobile outage.
GenusPlus Group dropped 8.1%, despite the Telstra contractor saying it was not involved in and had not contributed to the outage.
The heavyweight mining sector fell 2%, with BHP down 2.3% to $57.51, Rio Tinto losing 2.6% to $163.85 and South32 easing 1% to $3.96.
Gold stocks also weakened as the precious metal fell about US$40 to a six-day low of US$4,125 an ounce. Evolution Mining dropped 4.2% and Northern Star Resources lost 1.7%.
Minerals 260 was the worst performer on the ASX 200, sinking 16.5% to a three-month low of 63.5 cents after releasing plans for its proposed Bullabulling gold mine in Western Australia’s Goldfields.
In technology, WiseTech Global fell 7.3%, giving back the previous day’s gains and more after founder Richard White resigned as executive director on Tuesday.
Xero lost 1.2%, Life360 dropped 2% and Appen retreated 3.2%.
In consumer discretionary stocks, Adairs slipped 1.3% to $1.47 after flagging a $62 million to $68 million goodwill write-down on its struggling Focus on Furniture business.
Wall Street mixed as Trump says Iran deal is “over”
US sharemarkets were mixed on Wednesday after President Donald Trump said an interim deal aimed at ending the war with Iran was “over”.
The Dow Jones index finished 1.1% lower, the S&P 500 fell 0.3%, while the Nasdaq edged 0.2% higher.
Nine of the 11 S&P 500 sectors declined, led by materials, which fell 2.5%, and financials, which lost 1.9%.
Technology heavyweights Microsoft and Alphabet each fell more than 1%.
Broadcom gained 4.8% after Apple said it planned to spend more than US$30 billion as part of a chip-supply agreement reached earlier this week with the company.
Nvidia rose about 3.7% after The Information reported that China planned to allow its top artificial intelligence companies to buy a limited number of the company’s H200 chips.
That helped the Philadelphia semiconductor index gain 2.2%.
Travel stocks fell as higher oil prices stoked concerns about fuel costs and demand. United Airlines lost 1.6%, Delta Air Lines fell 1.5%, Carnival dropped 3.8% and Norwegian Cruise Line slipped 1.9%.
US government bond yields rose as investors reacted to the Middle East flare-up, the jump in oil prices and a broad pullback in stocks and bonds.
The US 10-year Treasury yield rose 5 basis points to 4.58%, while the US 2-year Treasury yield added 6 basis points to 4.22%.
Europe suffers steepest fall since March
European sharemarkets posted their steepest one-day fall since mid-March after Trump cast fresh doubt over peace prospects in the Middle East, reigniting concerns about oil prices and inflation.
The continent-wide FTSEurofirst 300 index ended 1.6% lower, while the UK FTSE 100 declined 1.7%.
Spain’s IBEX was the worst performer among major regional bourses, falling 2.7% after Trump said he had ordered Treasury Secretary Scott Bessent to cut off all trade with Spain and described Madrid as a “terrible partner”.
Across Europe, basic resources and construction and materials stocks were among the biggest drags, losing 4.4% and 3.7% respectively.
Technology stocks were mixed, with chip equipment maker ASML up 1.3%, while Aixtron dropped 2.7%.
Higher crude prices weighed on airlines, with Air France down 6.6% and Wizz Air losing 5%.
Currencies mixed
Currency markets were mixed against the US dollar.
- The euro was flat at US$1.1414.
- The Japanese yen fell 0.3% to JPY162.61.
- The Australian dollar was steady at US69.28 cents.
Oil surges, metals fall
Global oil prices jumped after Trump threatened fresh strikes against Iran, raising concerns that Tehran could again move to close the Strait of Hormuz to shipping traffic.
Brent crude futures settled 5.2% higher at US$78.02 a barrel.
Base metals were weaker as the Middle East flare-up revived concerns about global demand.
- Copper futures dropped 1.9% and aluminium futures fell 2%.
- Gold futures also declined as oil prices surged and inflation concerns intensified. Gold settled 1.8% lower at US$4,082 an ounce.
- Iron ore futures advanced on improving Chinese warehouse demand and a rise in property sales, settling 0.9% higher at US$98.86 a tonne.
Looking ahead
In the US, second-quarter earnings season begins with PepsiCo reporting, while existing home sales data for June will also be released.
China is scheduled to publish June CPI and PPI figures, while Japan will release June PPI data.