Australian shares set to fall as oil rises and Iran ceasefire frays
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The news: The Australian sharemarket is set to open lower after US equities fell overnight, as escalating tensions between the US and Iran fuelled concerns that prospects for a peace deal could be deteriorating, while elevated energy prices added to inflation risks.
The numbers: Updated at 8:00am AEST:
- ASX futures: down 75 points to 8,734 points
- Wall Street: Dow Jones down 1.21%, S&P 500 down 0.74%, Nasdaq down 0.89%
- Europe: FTSE 100 down 0.40%, CAC 40 down 0.71%, DAX down 1.31%
- Spot gold: down 1.22% to USD4,435.99 per ounce
- Oil prices: Brent up 1.39% to USD97.33/barrel, US WTI up 2.12% to USD95.68/bbl
- AUD: down 0.74% at 71.27 US cents
- Bitcoin: down 1.95% to USD65,478
The context: All three major US indices closed lower on Wednesday, with the S&P 500 snapping a nine-session winning streak. Losses accelerated late in the session after all three major indices had reached fresh record highs for the fifth consecutive day on Tuesday.
The Philadelphia Semiconductor index rose 1.4%, highlighting continued optimism for AI-related stocks. However, the S&P Software & Services index fell 4% as concerns over AI-driven disruption weighed on the sector.
Elsewhere, Brent crude climbed above USD97 ($135) a barrel as investors grew less confident that a peace deal would materialise. The move followed Iran’s largest attack since the ceasefire began nearly two months ago, with strikes targeting Kuwait and damaging its airport, reportedly killing one person and injuring more than 60 others. At the same time, US forces carried out strikes near the Strait of Hormuz, while diplomatic efforts showed little sign of progress.
Iran’s Islamic Revolutionary Guards denied targeting Kuwait’s airport, blaming the damage on US interceptor missiles that missed their targets, according to Iranian state media. The US military rejected that account, saying Iranian drones had deliberately targeted the airport, Reuters reported.
On the economic front, the Federal Reserve’s Beige Book showed rising energy prices since the start of the conflict have heightened concerns about persistent inflation, prompting some policymakers to argue they need to keep all options on the table, including tighter monetary policy.
Markets are now pricing in a 41.8% probability of a Fed rate hike in December, up from 9.1% a month ago, according to CME’s FedWatch tool.
Locally, the Australian Bureau of Statistics is scheduled to release March data on assets and liabilities of Australian securitisers, along with April international trade figures at 11:30am AEST.
