The Australian sharemarket is expected to open slightly lower as rising oil prices renew inflation concerns, although record copper prices could support heavyweight mining stocks.
ASX 200 futures were pointing to a decline of 7 points, or 0.1%, at the open.
Brent crude reached a six-week high as renewed US-Iran hostilities threatened Middle Eastern energy supplies, while copper touched a record on the London Metal Exchange amid concerns about supply outside the United States.
ASX holds above 9,000 points
The S&P/ASX 200 edged 0.1% higher to 9,010.90 on Monday, maintaining its position above the psychologically significant 9,000-point level.
Mining stocks could outperform after benchmark three-month copper futures on the London Metal Exchange rose as much as 0.8% to a record US$14,533 a tonne.
However, several companies will trade ex-dividend, including BlueScope Steel (ASX:BSL), Mineral Resources, AUB Group, Smartgroup and News Corp (NASDAQ:NWSA). Their shares may open lower to reflect the value of the detached payments.
Westpac consumer sentiment and NAB business confidence will headline the domestic economic calendar.
Wall Street closed for Labour Day
US share and bond markets were closed on Monday for the Labour Day holiday, leaving Australian investors without a fresh Wall Street lead.
US stock futures were mixed in cautious holiday trading. S&P 500 futures fell 0.2%, while Nasdaq 100 contracts edged higher.
Markets are continuing to digest Friday’s stronger-than-expected US employment report, which increased expectations that the Federal Reserve could raise interest rates at its September meeting.
Attention will now shift towards US inflation data later this week for further clues about the monetary policy outlook.
European markets steady
European share markets finished broadly unchanged as stronger eurozone economic data was offset by concerns that rising energy prices could intensify inflation.
The FTSEurofirst 300 was flat at 2,597.04, while the UK’s FTSE 100 declined 0.1% to 10,822.13.
Germany’s DAX fell 0.2%, while France’s CAC 40 gained 0.3%. The Swiss market dropped 0.8%.
Eurozone investor confidence reached its strongest level in more than four years during September. The region’s economy expanded 0.6% during the second quarter and 1.2% from a year earlier, exceeding forecasts.
Energy stocks gained 1.2% as oil prices rose.
Volkswagen advanced after agreeing on a turnaround plan, while Italy’s Lottomatica climbed 7.7% after providing further details about the expected benefits of its proposed merger with Spanish gaming group Cirsa. Cirsa gained 6.1%.
Novartis fell 3.2% after its closely watched cholesterol drug, pelacarsen, failed in a late-stage clinical study.
Semiconductor supplier Soitec surged 12%, while Infineon Technologies (XETRA:IFX, OTC:INFNNY) gained 6.9% following a broker upgrade. Wind-turbine manufacturer Nordex also rose as much as 12% after Bank of America upgraded the stock.
Japanese shares rally
Japan’s Nikkei gained 1,378.90 points, or 2.1%, to 66,399.84.
The rally coincided with a sharp strengthening of the yen as investors increased expectations of faster monetary policy tightening by the Bank of Japan.
Australian dollar strengthens
The Australian dollar gained 0.2% to US72.18 cents, up from US72.09 cents on Monday afternoon.
The euro rose 0.1% to US$1.1623.
The Japanese yen strengthened 1.2% to ¥154.35 per US dollar, its highest level in seven months, amid expectations that the Bank of Japan could accelerate interest-rate increases.
Bitcoin edged 0.1% higher to US$79,198.
Oil reaches six-week high
Brent crude rose 1.1% to settle at US$97.31 a barrel, its highest level in six weeks.
Prices increased after Iran threatened attacks on energy infrastructure across the Middle East in response to further US strikes on its assets.
Regional tensions were compounded by reports of an attack on Saudi Aramco’s Jazan refinery and Israeli strikes in southern Lebanon.
Shipping through the Strait of Hormuz remains heavily constrained. An average of 10 commodity vessels per day passed through the waterway over the past 10 days, the lowest level since May.
The disruption has sharply reduced oil supplies from the region and increased concerns that higher energy and transport costs will add to global inflation.
Copper touches record
Copper reached a record US$14,533 a tonne on the London Metal Exchange before trimming part of its advance.
The rally was driven by expectations of supply shortages outside the US, speculative fund buying and a weaker US dollar. Investors are also anticipating that the Trump administration could expand tariffs to imports of refined copper.
US copper futures traded slightly higher at around US$6.645 a pound during the shortened holiday session.
Iron ore futures rose 0.8% to US$100.35 a tonne, providing another positive signal for Australian miners.
Trades in copper and iron ore will officially settle on Tuesday following the US holiday.
Gold retreats on rate-rise expectations
Gold futures fell around 0.5% in shortened holiday trading as Friday’s strong US jobs report reinforced expectations of a Federal Reserve rate rise.
Spot gold was trading at US$4,404.67 an ounce.
Monday’s futures trades will be carried over and officially settled when normal US market trading resumes.
What to watch
Westpac consumer sentiment and NAB business confidence will be the main Australian economic releases.
Oil prices, developments in the Middle East and the performance of mining stocks following copper’s record high are likely to drive the local session.
US markets reopen on Tuesday, with investors preparing for inflation figures that could determine whether the Federal Reserve raises rates later this month.