The Australian sharemarket is poised for a weaker start on Thursday after oil prices surged above US$100 a barrel and global equities retreated amid escalating Middle East tensions and renewed inflation concerns.
ASX futures at 5.50am AEST were pointing to a 94-point, or 1.1%, fall at the open, putting the market on course to extend a volatile week in which higher energy prices have revived expectations of further Reserve Bank of Australia (RBA) interest rate increases.
Investors will also be watching the Melbourne Institute’s inflation expectations report, while Breville, Perpetual, SGH, Sandfire Resources, Regis Resources, Kogan and Nine Entertainment are among companies trading ex-dividend.
ASX edges lower as energy and miners outperform
The S&P/ASX 200 finished Wednesday down 9.40 points, or 0.1%, at 8,911.40 after opening higher and reversing course during the session.
Seven of the 11 sectors finished in negative territory, although energy and mining stocks advanced as oil and base metal prices remained elevated.
Energy stocks benefited from the oil rally, with Woodside Energy gaining 2.6%, Santos rising 1.3% and Ampol adding 1.4%.
Mining majors were also stronger. BHP climbed 3.3%, Rio Tinto advanced 1.9% and Fortescue Metals gained 0.5% as copper prices remained close to record levels.
Gold producers weighed on the sector, however, with Northern Star Resources down 2% and Evolution Mining falling 1.6% as both traded ex-dividend.
CSL dropped 2.1% as it also went ex-dividend, while the major banks weakened. Commonwealth Bank fell 2.2%, National Australia Bank lost 1.5%, Westpac declined 0.6% and ANZ slipped 0.4%.
Austal was a standout, jumping 7.1% after receiving a competing proposal for its US operations from Wildcat Infrastructure, which valued the business at between US$1.25 billion and US$1.35 billion.
The Australian dollar strengthened during Wednesday’s local session but was trading around US72.18 cents overnight.
Wall Street retreats as oil surge revives inflation fears
US sharemarkets fell as crude prices pushed above US$100 a barrel, increasing concerns that higher energy costs could keep inflation elevated and interest rates higher for longer.
The Dow Jones Industrial Average finished 0.8% lower, the S&P 500 declined 0.5% and the Nasdaq Composite lost 0.6%.
Energy was the only S&P 500 sector to finish higher, gaining 1.1%.
Meta Platforms bucked the weaker trend with a 6.6% rise after launching an AI assistant capable of carrying out tasks including sending emails, selling a car and making travel bookings.
Apple slipped 0.3% as it held its first smartphone launch under new chief executive John Ternus, while Alphabet fell 2.1% after announcing plans to invest at least US$15 billion in AI infrastructure in Finland.
Semiconductor stocks were relatively resilient, with the sector gaining 0.4% and Advanced Micro Devices rising 3%.
US Treasury yields also moved higher. The benchmark 10-year yield gained 4 basis points to 4.84%, its highest level since 2023, while the two-year yield rose 3 basis points to 4.43%.
Investors are now looking ahead to US producer price inflation, existing home sales and weekly jobless claims.
Europe falls ahead of ECB decision
European sharemarkets dropped to their lowest levels in more than a month as surging crude prices weighed on risk appetite and pushed government bond yields higher.
The FTSEurofirst 300 fell 1.4% and the UK FTSE 100 declined 1.3%.
Energy was again the only sector in positive territory, rising 0.3%.
Finnish energy group Fortum surged 16% after signing a long-term power purchase agreement with Google, while Zara owner Inditex dropped 3.6% following weaker-than-expected second-quarter profit.
Eurozone bond yields rose as markets increased expectations for tighter monetary policy, with traders pricing in two European Central Bank rate increases during 2026 and a policy rate of around 3.1% by late 2027.
Attention now turns to the ECB’s latest interest rate decision.
Currencies mixed against US dollar
Major currencies were mostly firmer against the US dollar.
- The euro was broadly unchanged at US$1.1628.
- The Japanese yen strengthened 0.2% to ¥153.64 against the dollar.
- The Australian dollar was steady at US$0.7218.
Oil breaks US$100 as Middle East tensions escalate
Oil was the dominant market driver, with Brent crude climbing above US$100 a barrel for the first time since late July.
Brent futures settled 3.3% higher at US$101.21 a barrel after Iran and the US struck tankers in a fresh escalation of attacks on shipping, adding to concerns over Middle Eastern energy supplies and disruption around the Strait of Hormuz.
Base metals were also stronger.
- Copper futures rose 1% to a record high as tight supply outside the US outweighed concerns about the impact of higher oil prices on global economic growth.
- Aluminium gained 0.8%.
- Gold futures rose 0.5% to US$4,461 an ounce as the US dollar remained under pressure.
- Iron ore moved in the opposite direction, falling 0.6% to US$99.37 a tonne after China’s August iron ore imports came in ahead of expectations.
