The Australian sharemarket is expected to give back some of Monday’s strong gains, with futures at 4.55am AEST pointing to a fall of 31 points, or 0.4%, at the open.
Investors will be watching comments from Reserve Bank of Australia (RBA) governor Michele Bullock, while attention is also turning to Wednesday’s US Federal Reserve decision and a heavy week of major technology earnings.
ASX posts strongest session since mid-June
Australian shares recorded their best session since mid-June on Monday as oil prices retreated following reports that the United States and Iran had paused hostilities after almost two weeks of airstrikes.
The S&P/ASX 200 jumped 121.7 points, or 1.39%, to 8,894, while the broader All Ordinaries gained 122.3 points, or 1.37%, to 9,063.8.
Oil prices have fallen more than 12% since the weekend, with Brent crude retreating sharply from last Thursday’s peak above US$102 a barrel as hopes grew that the pause in fighting could lead to a diplomatic resolution.
Materials stocks led the market higher with a 2.4% gain, supported by strength in mining heavyweights BHP and Rio Tinto despite relatively steady copper and iron ore prices.
Gold producers also advanced, while spot gold remained just below US$4,100 an ounce as safe-haven demand was balanced by ongoing inflation and interest rate concerns.
Wall Street mixed as chip stocks slide
US sharemarkets finished mixed on Monday as investors assessed the pause in US attacks on Iran and looked ahead to the Federal Reserve’s policy decision and a wave of technology earnings.
The Dow Jones Industrial Average rose 0.5%, the S&P 500 finished flat and the Nasdaq Composite declined 0.2%.
Semiconductor stocks came under heavy pressure, with Nvidia falling 4.9% and Advanced Micro Devices losing more than 5%.
The Philadelphia Semiconductor Index extended its recent sell-off and is now around 20% below its June record high.
The weakness followed the market debut of Chinese chipmaker CXMT Corp and reports that China had begun manufacturing its own immersion deep ultraviolet lithography machines, raising concerns about growing competition for US semiconductor companies.
Oil producers also declined as crude prices fell, with Occidental Petroleum and Exxon Mobil both trading lower.
Consumer staples and healthcare stocks outperformed.
Investors are preparing for results from four of Wall Street’s “Magnificent Seven” companies, with Microsoft, Meta, Apple and Amazon all due to report this week. Spending on artificial intelligence infrastructure is expected to be a major focus.
US Treasury yields eased as oil prices fell, with the 10-year yield down 3 basis points to 4.65% and the two-year yield slipping 1 basis point to 4.32%.
European markets flat as travel stocks rise
European sharemarkets finished broadly unchanged as investors considered the pause in fighting between the US and Iran and awaited the Federal Reserve decision and US technology earnings.
The continent-wide FTSEurofirst 300 index ended flat, while the UK’s FTSE 100 gained 0.4%.
Travel and leisure stocks advanced as lower oil prices reduced concerns about fuel costs and transport disruption.
Technology stocks weakened, led by semiconductor equipment maker ASML following reports of progress in China’s domestic lithography manufacturing capabilities.
AstraZeneca rose 1.7% after the pharmaceutical company exceeded second-quarter profit expectations and reaffirmed its 2026 guidance.
US dollar softens as oil prices retreat
The US dollar weakened as the decline in oil prices reduced some of the immediate inflation concerns surrounding the Middle East conflict.
- The euro traded at US$1.1367.
- The Japanese yen was at ¥163.73 to the US dollar.
- The Australian dollar was buying US69.89 cents.
Oil tumbles as ceasefire hopes build
Global oil prices fell to a one-week low after the US called off its campaign of airstrikes against Iran over the weekend.
The decision raised hopes of a diplomatic solution and improved confidence that energy supplies could continue moving safely through the Strait of Hormuz, although the current situation remains only a pause in fighting.
- Brent crude futures fell 8.7% to US$88.36 a barrel.
- Base metals moved higher, with copper adding 0.3% and aluminium futures rising 0.4%.
- Gold futures gained 0.2% to settle at US$4,077 an ounce.
- Iron ore futures declined to US$98.35 a tonne.
Looking ahead
In Australia, RBA governor Michele Bullock is due to speak at a fundraising lunch in Sydney.
Quarterly updates are also expected from Aeris Resources, Genesis Minerals (ASX:GMD), IGO, Iluka Resources and Whitehaven Coal.
Australia’s June quarter consumer price index will be released on Wednesday, followed by June building approvals on Thursday.
In the US, the Federal Reserve is expected to leave interest rates unchanged when it concludes its meeting on Wednesday.
Microsoft and Meta are also scheduled to report earnings on Wednesday, followed by Apple and Amazon on Thursday.