ASX 200 futures rose 17 points or 0.19% by 8:30 am AEST on Thursday. This upward move follows mixed global signals. Traders observed pressure from escalating Middle East tensions and weaker US equity closes.
US Markets End Lower After Early Gains Fade
Major US indices opened stronger but closed near session lows. Market sentiment turned after Iran threatened US bases. Iran warned of retaliation if nuclear negotiations failed. The US responded by preparing evaluations of select embassies.
US Inflation Cools Again
US inflation for May printed at 2.35%, below the 2.5% consensus. Core inflation came in at 2.8%, also under estimates. This marked the fourth consecutive month of cooler-than-expected inflation. Analysts noted that companies held back on passing tariff-related costs to consumers.
Oil Prices Surge on Geopolitical Concerns
Oil prices jumped by 6% overnight as tensions rose in the Middle East. Brent crude exceeded US$70 a barrel for the first time since May. Speculation about supply disruptions drove the move. The S&P 500 Energy Sector gained 1.49%, showing a modest response.
Energy Sector Shows Signs of Fatigue
Despite the oil rally, Australian energy stocks showed muted response. Most local energy names bounced strongly from 7 April lows. Woodside shares gained around 25% in that timeframe. However, JPMorgan downgraded Woodside to Neutral and lowered its target from $26.80 to $23.90.
Volatility Expected to Rise
Markets appear to be entering a more volatile period. Escalating geopolitical tensions, ongoing trade discussions, and high equity valuations contributed to uncertainty. The ASX 200 closed 0.06% higher on Wednesday. It was down from intraday highs of 0.6%, signalling some exhaustion.
US-China Trade Developments Progressing
US and Chinese officials agreed on a framework to restore the trade truce. This included lifting China’s rare earth export restrictions. Final sign-off remains pending between President Xi and former President Trump. Trump stated, “China would supply rare earths and magnets up front.” He also said, “Chinese students will be able to attend US colleges and universities.”
US-Mexico Tariff Agreement Nearing
Reports suggest the US and Mexico are nearing a deal on steel tariffs. The agreement would exempt Mexican steel from the 50% tariff up to a certain quota.
US Courts Uphold Tariff Policies
A Federal Appeals Court ruling allowed existing tariffs to remain. Meanwhile, the EU expects US trade negotiations to extend past Trump’s 9 July deadline.
Central Bank Outlook Mixed
The European Central Bank’s Kazaks said, “Some fine-tuning rate cuts [are] quite likely.” Meanwhile, economists anticipate the Bank of Japan to slow its JGB purchase tapering next year.
Military and Security Developments Escalate
The US ordered some staff to leave its Baghdad embassy citing security threats. The move followed Iranian threats to US bases. Iran issued warnings amid faltering nuclear program discussions.
Tech and Consumer Stocks Drive Headlines
Meta CEO Mark Zuckerberg invested $14 billion in Scale AI. He hired Scale co-founder Alexandr Wang to accelerate Meta’s AI development. Starbucks CEO Kevin Johnson is considering selling a stake in its China division to lift regional sales.
Automotive Industry Responds to Tariff Challenges
GM pledged $4 billion to boost US gasoline car production. This comes as EV demand slows and tariffs increase. The strategy aims to support near-term demand despite green transition pressures.
Media and Retail Update
Moody’s downgraded Warner Bros debt to junk status amid cable struggles. The company faces internal staff frustration ahead of a planned split. Zara’s parent Inditex posted a 6% revenue rise over five weeks to 9 June. This was below last year’s pace. The company warned foreign exchange volatility could reduce sales by 3% this year.
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Gaming Market Surges With Switch 2
Nintendo’s Switch 2 sold 3.5 million units in four days. This outpaced the original Switch’s 2.7 million first-month sales in 2017. The performance exceeded market forecasts and buoyed retail expectations.
Australian Corporate Moves
AGL Energy plans to sell its 20% stake in Tilt Renewables. ARN Media Chair Hamish McLennan bought 96,000 shares and now owns 169,000 shares. Iperionx secured its first US Army task order valued at $1.3 million. The order comes under a broader $99 million SBIR Phase III contract.
Precious Metals and Uranium Markets Strengthen
The Global X Uranium ETF surged 5.3% to a decade high. Gold and platinum prices rebounded after recent pullbacks. Platinum rose 4.3% overnight and has gained nearly 30% since mid-May.
Watch for Sector Rotation and Market Cues
Traders are monitoring volatility, energy trends, and inflation impacts. Sector rotation remains a key theme. Rising oil prices and soft inflation data may influence near-term positioning.
