The Australian sharemarket is expected to open marginally lower on Tuesday, with futures pointing to a one-point decline after local stocks pushed above 9,000 and Wall Street began August with strong gains.
Investors will continue to assess developments in the conflict between the United States and Iran, with hopes of diplomatic talks pushing oil prices sharply lower but conflicting reports from Tehran maintaining uncertainty.
ASX futures point to subdued opening
The S&P/ASX 200 is set for a largely unchanged start as attention turns to Australian economic data and the accelerating corporate reporting season.
ANZ job advertisements and June household spending figures are due, while upcoming company results include Pinnacle Investment Management on Wednesday, REA Group on Thursday and James Hardie Industries and Nick Scali on Friday.
Lower oil prices are likely to weigh on energy producers, although the retreat in crude could provide support to consumer, transport and industrial stocks by easing concerns about inflation and operating costs.
Australian shares push above 9,000
Australian shares recovered from a weak opening to finish Monday firmly higher as falling oil prices raised hopes that the US and Iran could move towards de-escalating their conflict.
The S&P/ASX 200 climbed 42.5 points, or 0.47%, to 9,019.3, while the broader All Ordinaries advanced 41.4 points, or 0.45%, to 9,178.4.
Eight of the market’s 11 sectors finished higher, led by utilities, industrials, healthcare and consumer stocks.
However, Moomoo Australia and New Zealand chief executive Michael McCarthy warned that investors remained cautious about the reliability of reports surrounding the Middle East.
“It surprises me how many times the market has been willing to give the US grace and favour over its claims about the peace situation in the Middle East,” McCarthy said.
He added that sharp volatility in US equities was also making it difficult for global investors to determine the market’s direction.
“It’s all over the shop, and the increasing uncertainty that’s coming with the absolutely radical movement in US shares is making investors all around the globe nervous, and Australia’s are no exception,” McCarthy said.
Energy falls as utilities and industrials outperform
The energy sector was the weakest performer, falling 1.2% after crude prices declined on reports that Washington and Tehran could return to negotiations.
Utilities led the gains with a 2.1% rise, supported by strong performances from Origin Energy and AGL Energy (ASX:AGK). Origin continued to recover from a sell-off linked to its recent data breach.
Industrials gained 1.4%, with airlines attracting buying interest. Qantas Airways (ASX:QAN) advanced more than 2%, while Virgin Australia rose more than 3%.
Consumer staples and consumer discretionary stocks each added more than 1%, while healthcare also outperformed the broader market.
Financials finished higher, with Westpac leading three of the four major banks into positive territory after completing the sale of its RAMS mortgage portfolio to a consortium led by Pepper Money.
Miners recover despite weaker iron ore
Mining stocks reversed early losses to finish 0.3% higher, although Fortescue weighed on the sector as iron ore futures fell to a 13-month low below US$94 a tonne.
BHP and Rio Tinto closed on either side of break-even, with Rio slipping 0.6% despite copper reaching its highest level since early June.
Gold stocks were mixed but broadly stronger, lifting the local gold sub-index by 0.7% as the precious metal traded near US$4,065 an ounce.
In company news, Vulcan Energy Resources gained almost 3% after appointing former Lynas Rare Earths chief executive Amanda Lacaze as an independent non-executive director.
Wall Street begins August with strong gains
US sharemarkets rallied during the first trading session of August, with the Dow Jones Industrial Average closing at a record high.
Signs of easing US-Iran tensions pressured crude oil prices, while investors also assessed corporate earnings and upcoming economic data.
The Dow gained 1.3%, the S&P 500 rose 1.5% and the Nasdaq advanced 2.1%.
Communication services was the strongest of the S&P 500’s 11 major sectors, climbing 4.3% as Meta Platforms and Alphabet rallied. Energy was the weakest sector, falling 1.2%.
Amazon shares rose more than 4.5%, lifting the company’s market capitalisation above US$3 trillion for the first time.
SpaceX jumped 5.6% ahead of its first quarterly results since listing, while Apple fell 1.8% as investors continued to reduce exposure to the technology giant.
Marriott International slumped 7% after forecasting third-quarter profit below market expectations.
US government bond yields moved lower as falling oil prices eased inflation concerns. The 10-year Treasury yield dropped seven basis points to 4.68%, while the two-year yield fell five basis points to 4.24%.
Major US companies reporting on Tuesday include Advanced Micro Devices, Caterpillar, Pfizer and McDonald’s.
European markets mostly higher
European sharemarkets also began the month on firmer ground as the sharp decline in oil prices improved sentiment around the economic outlook.
The continent-wide FTSEurofirst 300 index gained 0.4%, although London’s FTSE 100 bucked the broader trend and slipped 0.1%.
Aerospace and defence stocks were the strongest regional performers, climbing 2.7%, while travel and leisure stocks gained 0.6% as lower fuel prices supported airlines and tourism businesses.
AstraZeneca shares tumbled 9% following reports of a potential US$400 billion merger involving the European pharmaceutical company and US-based Bristol Myers Squibb.
Australian dollar holds at US70 cents
Major currencies weakened against the US dollar.
- The euro traded at US$1.1508.
- The Japanese yen was at ¥157.19.
- The Australian dollar was buying US70 cents.
Japan and the United States also confirmed they had undertaken a rare joint intervention to buy yen and support the Japanese currency, with both countries indicating that further action could be taken if required.
Oil plunges on hopes of Iran talks
Global oil prices fell heavily after US President Donald Trump said talks with Iran aimed at reopening the Strait of Hormuz would take place on Monday, although Iran disputed that negotiations had been scheduled.
The expiry of the September oil contract and the shift to lower-priced October futures also contributed to the decline.
OPEC+ approved a September production quota increase of around 188,000 barrels per day, adding further pressure to the market.
Brent crude futures settled 4.7% lower at US$83.77 a barrel.
Copper rises as gold and iron ore fall
Base metal prices strengthened, with copper supported by lower energy prices, easing concerns about global economic growth and shrinking exchange inventories.
Gold futures edged lower as investors weighed continued uncertainty in the Middle East, inflation risks and a series of upcoming US employment reports that could influence the Federal Reserve’s interest rate outlook.
- Gold settled 0.4% lower at US$4,090.50 an ounce.
- Iron ore futures fell 1.5% to US$93.66 a tonne, maintaining pressure on Australia’s major producers and contributing to Fortescue’s underperformance during Monday’s session.