Australian shares to open lower as renewed US-Iran tensions rattle markets
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The news: The Australian sharemarket is set to open lower after a mixed session on Wall Street overnight, as renewed geopolitical tensions unsettled markets following comments from US President Donald Trump that the ceasefire with Iran may be over. The remarks sent oil prices higher and weighed on stocks and bonds.
The numbers: Updated at 8:00am AEST:
- ASX futures: down 49 points to 8,706 points
- Wall Street: Dow Jones down 1.09%, S&P 500 down 0.28%, Nasdaq up 0.20%
- Europe: FTSE 100 down 1.66%, CAC 40 down 2.18%, DAX down 2.23%
- Spot gold: down 0.72% to USD4,075 per ounce
- Oil prices: Brent up 6.71% to USD79.15/barrel, US WTI up 5.79% to USD74.51/bbl
- AUD: up 0.02% at 69.30 US cents
- Bitcoin: down 1.73% to USD62,217.
The context: US stocks finished mostly lower on Wednesday, with the Dow Jones down 1.1% and the S&P 500 off 0.3%, while Nasdaq pared earlier losses to close slightly higher.
The move followed comments from Trump at a NATO summit in Turkey, where he said the interim deal reached with Iran last month was “over”, and the US was likely to launch further strikes. Nearly 400 S&P 500 stocks fell, although the index pared losses after Trump said he did not think the conflict would restart.
Brent crude rose 6.7%, while the US 10-year Treasury yield climbed to 4.5% on concerns that higher oil prices could add to inflationary pressures.
Trump’s comments came after the US military launched overnight strikes on Iran, which it said were in response to Iranian attacks on commercial vessels in the Strait of Hormuz. Iran’s military said it retaliated by targeting US bases in Bahrain and Kuwait with missiles and drones, Reuters reported.
Helping keep the Nasdaq in positive territory, Broadcom rallied 4.8% after Apple said it plans to spend more than USD30 billion ($43 billion) as part of a chip-supply partnership with the company.
Elsewhere, minutes from the Federal Reserve’s meeting showed inflation concerns intensified among officials, who followed chair Kevin Warsh’s lead to a more stripped-down policy statement. Traders are pricing a likely rate hike by the Fed’s December meeting, according to CME’s Fedwatch.
