Market Open: Oil, rates and AI fears cloud the ASX outlook

ASX today – The ASX is facing a softer start on Tuesday after Wall Street fell overnight as surging oil prices pushed bond yields higher, while renewed concerns about AI spending hit technology stocks.

ASX 200 futures are pointing to a softer open, after the local benchmark managed to edge 0.1% higher to 8,749.9 on Monday and snap a four-session losing streak.

The modest gain masked continued weakness in heavyweight miners, with gains in healthcare, consumer staples and parts of the financial sector helping offset the pressure.

The bigger issue remains oil.

Brent crude climbed as renewed Middle East tensions and disruption to Saudi oil infrastructure raised fresh concerns about global supply. The jump is feeding directly into the inflation and interest-rate debate, with higher energy costs making it harder for central banks to ease policy even as growth concerns increase.

That was evident on Wall Street overnight. The S&P 500 fell 0.5%, the Dow dropped 0.3% and the Nasdaq lost 0.6%, while the US 10-year Treasury yield briefly pushed above 5% before easing to around 4.95%.

Technology stocks also came under pressure as investors digested warnings from major AI industry figures about the pace and risks of AI development.

For Australian investors, the immediate focus is likely to be on energy, miners, technology and rate-sensitive stocks.

Higher oil prices could continue to support energy producers such as Woodside and Santos, while creating a broader headwind for the market through inflation and higher borrowing costs. The mining sector also enters the session from a position of weakness, after BHP, Fortescue and Rio Tinto were among the stocks weighing on the ASX on Monday.

Gold remains another area to watch, although bullion also fell overnight as the stronger US dollar and higher yields weighed on precious metals.

The other major catalyst is the Federal Reserve, which begins its two-day policy meeting today. Markets are pricing a high probability of a rate hike, with the decision and accompanying guidance likely to determine whether the current oil-driven inflation concerns become a broader risk for global equities.

Investors will also have fresh Chinese economic data to digest today, including industrial production, retail sales and fixed-asset investment, providing another read on demand in Australia’s biggest trading partner.

For the ASX, the question is whether Monday’s defensive resilience can hold after the overnight deterioration.

What investors are watching today

The Australian economic calendar is relatively light compared with the global events driving markets.

Local market news

Cosmo Metals (ASX: CMO) has received approval for maiden drilling at Mona prospect;

Mandrake Resources (ASX: MAN) has completed bulk brine production at Utah lithium project;

Evolution Energy Minerals (ASX: EVI) kicks off Chikundo RC drilling program;

Argenica Therapeutics (ASX: AGN) has selected concussion data for the Neurotrauma congress; and

Panther Metals (ASX: PNT) is advancing the Laverton gold development pathway.

Buck and ore

Now – in forex, the Oz dollar is buying US$$0.714

Looking at commodities, all in the greenback,

Iron Ore was down 0.48% to $97.55 per tonne in Singapore today,

Brent Crude was up 1.63% to $106.313 per barrel,

Gold was selling at $4296.70,

US natgas futures were up 1.22% to $2.8823 per gigajoule.

That’s HotCopper’s Market Open, I’m Colin Sandell-Hay – happy trading.

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