The Australian sharemarket is poised for a strong start on Wednesday, with futures at 6.14am AEST pointing to a gain of 76 points, or 0.9%, at the open.
Investors will be closely watching Australia’s June quarter inflation figures, which could test Tuesday’s dovish shift in interest rate expectations. The US Federal Reserve will also hand down its latest policy decision overnight, while Microsoft and Meta are due to report earnings.
ASX closes at six-week high
Australian shares reversed early losses to finish higher on Tuesday after signs of mounting economic pressure prompted markets to push out expectations for another Reserve Bank of Australia (RBA) interest rate increase.
The S&P/ASX 200 gained 53.8 points, or 0.6%, to close at 8,947.8, its highest daily finish in almost six weeks. The broader All Ordinaries advanced 48.2 points, or 0.53%, to 9,112.
In a largely hawkish address to the Anika Foundation, RBA governor Michele Bullock said demand growth was moderating broadly as expected following three cash rate increases in 2026. However, she noted that housing and labour market conditions had weakened more sharply than anticipated.
Market pricing for another rate increase was subsequently pushed out from the end of 2026 to March 2027, supporting consumer-sensitive sectors.
Consumer discretionary stocks led the market with a 2.7% gain.
The local rally contrasted with weaker performances across Asia, where South Korea’s KOSPI fell more than 10% and technology-heavy markets continued to unwind recent gains.
“The ASX 200 is up in five of the past six sessions and at its highest daily close in almost six weeks, continuing to benefit from its position as a low-beta safe haven,” IG market analyst Tony Sycamore said.
Consumer and financial stocks lead gains
Financial stocks rose 0.9%, with Commonwealth Bank adding 1.5% to $178.78 and helping lift the sector to within 2% of its April record high.
Energy companies also advanced despite further weakness in oil prices, with Woodside Energy and Santos among the stronger performers as Brent crude remained below US$85 a barrel.
Viva Energy surged more than 8% following a positive quarterly update, outperforming rival Ampol.
The move came as the Federal Government announced a $4 million feasibility study into the development of a large-scale oil refinery in Western Australia.
Consumer stocks, healthcare companies, communication services, information technology shares and real estate investment trusts also recorded solid gains.
Materials was the major laggard, falling 1.4% as gold, copper and iron ore prices weakened.
Among individual companies, Web Travel Group jumped more than 17% after announcing a $90 million share buyback alongside strong earnings growth.
Harvey Norman and Latitude Financial were ordered to pay penalties of $35 million and $20 million respectively after the Federal Court found that a credit card promotion conducted in 2021 and 2022 was misleading.
Wall Street mixed as chip stocks retreat
US sharemarkets finished mixed as gains in Boeing and Coca-Cola offset another heavy sell-off among semiconductor companies ahead of earnings reports from several major technology groups.
The Dow Jones Industrial Average rose 1%, the S&P 500 added 0.2% and the Nasdaq Composite slipped 0.2%.
Healthcare was the strongest sector, gaining 2.3%, while continued weakness among chipmakers dragged the technology sector down 1.1%.
The Philadelphia Semiconductor Index fell 4.5%, extending its decline to more than 20% since its record closing high on June 22. Despite the pullback, the index remains 56% higher for 2026.
Microsoft rose 1.1% ahead of its Wednesday earnings report, while Amazon eased 0.2% before reporting on Thursday.
Apple gained 1.1%, lifting its market capitalisation to US$5 trillion for the first time.
Coca-Cola rallied 5% after raising its annual revenue and profit forecasts, while Boeing jumped 4.8% after reporting positive free cash flow as its turnaround strategy gained momentum.
Corning dropped 12% after its third-quarter sales outlook missed expectations. Contract research company IQVIA Holdings surged 14% after upgrading its full-year profit forecast.
US Treasury yields declined ahead of the Federal Reserve’s interest rate decision. The benchmark 10-year yield fell four basis points to 4.60%, while the two-year yield also dropped four basis points to 4.28%.
European markets extend winning run
European sharemarkets rose for a third consecutive session as strong corporate earnings lifted consumer-focused companies.
The pan-European FTSEurofirst 300 index gained 0.3%, while the UK’s FTSE 100 rose 0.8%.
Unilever surged 8%, its strongest one-day performance in four years, after the consumer goods company exceeded second-quarter sales growth expectations.
Mercedes-Benz gained 2.9% after reporting a 22% increase in quarterly operating profit.
Luxury stocks also strengthened after LVMH reported a 3% rise in quarterly sales. LVMH shares were broadly unchanged, although the wider European luxury index advanced 1.5%.
Barclays fell 4.8% despite delivering a better-than-expected 17% increase in first-half profit, with analysts pointing to weaker-than-anticipated performance from its equities business.
Australian dollar eases
Major currencies were mixed against the US dollar.
- The euro rose 0.2% to US$1.1386.
- The Japanese yen weakened 0.1% to 163.86 yen per US dollar.
- The Australian dollar declined 0.2% to US$0.6974.
Oil and gold retreat
Global oil prices fell to a two-week low amid cautious optimism that the conflict with Iran could move closer to a resolution.
Brent crude futures dropped 4.8% to settle at US$84.09 a barrel as traders assessed the latest developments in the Middle East.
Base metals also weakened against a relatively firm US dollar.
- Copper futures declined 0.3%.
- Aluminium fell 1.4%.
- Gold futures dropped to their lowest level in a week as investors awaited the Federal Reserve’s policy decision. Gold settled 0.9% lower at US$4,039 an ounce.
- Iron ore futures edged down 0.1% to US$98.30 a tonne as Chinese steel mills remained shut for maintenance after receiving production restriction notices. A decline in global shipments helped limit the losses.
Inflation and Fed decision in focus
Australia’s monthly and quarterly Consumer Price Index figures for June will be released today and are expected to provide an important test of the market’s increasingly dovish interest rate outlook.
In the US, the Federal Reserve is widely expected to leave its target rate unchanged at 3.50% to 3.75%.
Corporate earnings season will also remain in focus, with Microsoft and Meta scheduled to release their latest results.