Market Open: Oil shock deepens as markets brace for Fed news

ASX today – The ASX is set to open higher on Wednesday, with futures pointing to a gain of around 0.4%, but the expected bounce comes against a more difficult global backdrop of rising oil prices, higher bond yields and renewed inflation concerns.

The ASX 200 fell 0.9% on Tuesday to 8,672.5, while Wall Street extended its losses overnight. The S&P 500 fell 0.5%, the Dow Jones lost 0.6% and the Nasdaq dropped 0.8% as higher Treasury yields continued to weigh on equities.

The biggest issue for markets remains oil. Brent crude is holding above US$108 a barrel as disruption to Middle East oil infrastructure raises concerns about global supply. Some physical crude cargoes have traded significantly higher as buyers look for alternative supplies.

The US 10-year Treasury yield moved above 5% overnight, adding another layer of pressure for markets and making the outlook for interest rates more uncertain.

The key event comes when the US Federal Reserve announces its latest interest-rate decision. Markets are focused not just on the decision, but on what the Fed signals about the path ahead as higher energy prices complicate the inflation outlook.

That could be particularly important for Australian investors heading into Thursday’s session, with the Fed’s commentary likely to influence global bond yields, the US dollar and risk appetite.

What investors are watching today

The domestic calendar is relatively light, meaning global markets and commodities are likely to remain the major drivers.

For investors, the immediate question is whether today’s expected bounce marks a stabilisation after the recent sell-off, or simply provides a pause before the next major test from oil, inflation and interest rates.

Local market news

Basin Energy (ASX: BSN) signs federally supported trailblazer research collaboration;

Terrain Minerals (ASX: TMX) obtains up to 93.7% gold recovery at Lightning;

Evion Group (ASX: EVG) has been accepted into a US Defense Industrial Base consortium;

Cannindah Resources (ASX: CAE) adds a second rig to its Breccia exploration program; and

American Tungsten & Antimony (ASX: AT4) commences its Del Sol refinery restart campaign ahead of schedule.

Buck and ore

Now – in forex, the Oz dollar is buying US$0.712

Looking at commodities, all in the greenback,

Iron Ore was down 0.14% to $97.41 per tonne in Singapore today,

Brent Crude was up 2.64% to $108.470 per barrel,

Gold was selling at $4292.30,

US natgas futures were up 1.69% to $2.9449 per gigajoule.

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

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