Market Open: Oil surge points to soft ASX opening

ASX today – The latest overnight situation suggests a weaker ASX 200 open, with oil and geopolitics now outweighing earlier AI/tech strength.

The market yesterday was relatively resilient: the ASX 200 gained 0.09% to 8,765.3, with materials rising 1.57%, while financials, energy and technology declined

The key change from Wednesday is the sharp rebound in oil jumping above US$100/barrel, creating pressure particularly on inflation-sensitive sectors and the broader risk appetite.

Brent crude and other oil benchmarks bounced higher due to persistent geopolitical risk premiums and concerns over extended Middle East supply disruptions

Wall Street had a rough session overnight, reversing some of the strength seen earlier in the week.

The S&P 500 was down 0.8% to 7,706.03l, the Dow Jones fell 0.7% to 51,511.59 and the Nasdaq was down 1.1%: to 26,936.04

The US market was hit after the US 10-year Treasury yield climbed to about 5.11%, its highest level since 2007. Two-year yields also rose sharply. Higher yields make stocks, particularly high-growth/technology stocks, less attractive because investors can earn more from relatively safe government debt.

Negatives for the ASX

Oil above US$100 → renewed inflation and rate concerns.

Banks remain vulnerable after financials fell Wednesday.

Australian bond yields remain elevated.

Gold remains historically high, supporting gold miners.

Materials/mining stocks showed strength on Wednesday.

One additional domestic factor is that the RBA’s next monetary-policy decision is due 29 September, with the cash rate currently at 4.35%. That makes incoming inflation/PMI and market pricing particularly relevant to Australian equities this week.

Bottom line: the immediate setup for Thursday is bearish-to-neutral, with 8,680–8,700 the key early zone. A sustained move below 8,650 would materially weaken the short-term technical picture; holding that zone and reclaiming 8,750 would improve it.

Local market news

Forrestania Resources (ASX: FRS) has continued its solid growth with release of British Hill MRE;

Galilee Energy (ASX: GLL) is set to commence Zydeco sidetrack testing of shallow oil targets;

Cannindah Resources (ASX: CAE) has unveiled a high priority Southern Porphyry target;

Genusplus Group (ASX: GNP) has been awarded a contract as part of the Parron Farm project; and

Kaoko Metals (ASX: KAO) has extended Donkey Hill drill program by 700m.

Buck and ore

Now – in forex, the Oz dollar is buying US $0.704

Looking at commodities, all in the greenback,

Iron Ore was down 0.08% to $97.24 per tonne in Singapore today,

Brent Crude was up 4.20% to $103.420 per barrel,

Gold was selling at $4287.39

US natgas futures were up 2.64% to $3.0434 per gigajoule.

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

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