The Australian sharemarket is expected to open lower on Tuesday after Wall Street slipped further from record highs as rising oil prices fuelled inflation concerns and hopes faded for a diplomatic breakthrough in the Iran conflict.
ASX futures were pointing to a 36-point, or 0.4%, fall at the open.
Locally, attention will turn to another busy day of corporate earnings, with market heavyweights BHP Group Ltd, CSL Ltd and Cochlear Ltd among those reporting results.
Other companies due to report include Pro Medicus, Region Group, HealthCo, Challenger, Reliance Worldwide, Sims and HUB24, while investors will also digest the Westpac consumer sentiment survey for August.
ASX starts week on back foot
The Australian market began the week lower on Monday as concerns about the economic outlook weighed heavily on banks and consumer discretionary stocks.
The S&P/ASX 200 fell 42 points, or 0.46%, to 9,073.2, while the broader All Ordinaries declined 34.2 points, or 0.37%, to 9,279.
Energy and materials were the only sectors to finish convincingly higher as commodity prices strengthened, while financials and consumer-facing companies dragged on the index.
Consumer discretionary stocks slumped 3%, led by a fall of more than 12% for JB Hi-Fi despite the retailer reporting annual group sales of a record $11.1 billion.
Investors focused instead on softer trading at its Australian JB Hi-Fi stores and The Good Guys as cost pressures, high interest rates and an uncertain economic outlook continued to weigh on household spending.
Financial stocks also remained under pressure, extending a slide of more than 6% since the sector reached a record high around 10 days earlier.
NAB led the big 4 banks lower, falling 4.6% to $39.46, after reporting a third-quarter cash profit of $1.8 billion alongside a cautious housing market outlook.
Materials outperformed, gaining around 1.8%, with BHP advancing ahead of its full-year results as copper prices strengthened.
Gold miners were also among the stronger performers as bullion prices advanced, while battery minerals stocks benefited from a continued rebound in lithium.
Energy stocks gained 0.9%, supported by coal miners and uranium producers.
Elsewhere, Lendlease shares dropped more than 11% after the property group recorded its fourth annual loss in 5 years, with write-downs linked to its international retreat continuing to weigh on the result.
Aurizon also fell around 11% despite lifting full-year profit by 24% to $463 million.
Wall Street retreats from record highs
US equities finished lower as investors weighed the inflationary implications of higher oil prices and fading prospects for a deal to end the nearly 6-month conflict in the Middle East.
Sentiment was further pressured by a rise in US 30-year Treasury yields to their highest level since 2007 as markets assessed inflation risks and government spending.
Investors are also looking ahead to earnings from major US retailers, including Walmart and Home Depot, after softer retail sales data last week raised fresh questions about consumer demand.
Most S&P 500 companies declined, although semiconductor stocks bucked the trend as recent earnings reinforced expectations that artificial intelligence demand remains strong.
Microsoft fell 3% and Meta Platforms declined 3.45%, while the broader software sector lost around 2.8% amid continuing debate over the impact of AI on traditional software businesses.
By contrast, the Philadelphia Semiconductor Index rose 1.6%. Micron Technology gained 4.1%, Marvell Technology jumped 6.1% and SanDisk climbed almost 9%.
The Dow Jones fell 0.5%, the S&P 500 lost 0.5% and the Nasdaq declined 0.3%.
US government bond yields moved higher, with the 10-year Treasury yield rising 3 basis points to 4.73% and the 2-year yield gaining 1 basis point to 4.18%.
Investors will turn their attention to minutes from the latest US Federal Reserve meeting, while Home Depot is scheduled to report earnings.
European markets extend losing streak
European markets closed lower for a fourth consecutive session as the recent earnings-led rally lost momentum and the continuing US-Iran stand-off dampened risk appetite.
Personal and household goods stocks fell 2.3%, while food and beverage companies also lost 2.3%.
Diageo declined 3.4% following reports that the spirits producer had agreed to reformulate some products in India following government pressure.
Luxury stocks fell around 2%, with Gucci owner Kering down 4.3% and LVMH losing 2.7%.
The FTSEurofirst 300 finished 0.2% lower, while London's FTSE 100 declined 0.3%.
Currencies mixed against US dollar
Currency markets were mixed against the US dollar.
- The euro gained 0.1% to US$1.1580.
- The Japanese yen weakened 0.1% to ¥159.47 per US dollar.
- The Australian dollar strengthened 0.3% to US71.05 cents.
Oil jumps as geopolitical risks build
Oil prices rose sharply as investors became increasingly pessimistic about diplomatic efforts to resolve the Iran conflict, adding to concerns about potential disruption to global energy supplies.
- Brent crude futures gained 2.7% to settle at US$90.87 a barrel.
Base metals were also stronger.
- Copper futures edged 0.1% higher to a 6-month peak, supported by concerns about availability on the London Metal Exchange, where inventories remain near their lowest levels since February.
- Aluminium futures climbed 2.1% amid continued concerns that the Middle East conflict could disrupt supply.
- Gold also advanced as expectations of a US Federal Reserve interest rate hike faded, with futures settling 0.8% higher at US$4,473 an ounce.
- Iron ore was the exception among the major commodities, with futures slipping 0.2% to US$94.95 a tonne.