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Highlights
- ASX 200 futures point to a weaker open after Wall Street declined on renewed semiconductor selling and geopolitical tensions.
- Oil prices surged as the US-Iran conflict intensified, while technology and mining sectors came under pressure.
- Energy and defensive sectors may outperform as investors respond to rising bond yields and global uncertainty.
Australian shares are expected to open lower after another weak session on Wall Street, where semiconductor stocks extended their decline and escalating tensions between the United States and Iran pushed oil prices sharply higher. While energy companies could benefit from stronger crude prices, weakness across technology and metals may weigh on sentiment as the ASX 200 prepares for Wednesday's trading session.
Wall Street Ends Lower As Chip Stocks Extend Declines
US markets finished in negative territory overnight, with technology shares leading losses for a second consecutive session.
The Nasdaq Composite declined more than 1%, while the S&P 500 and Dow Jones Industrial Average also closed lower after investors reacted to renewed weakness across semiconductor companies.
Major chipmakers including AMD, Intel and Micron posted notable declines as reports emerged that Chinese artificial intelligence company DeepSeek is developing its own AI inference chip, potentially increasing competitive pressure across the semiconductor industry.
Despite the broader technology weakness, several mega-cap companies including Nvidia, Microsoft, Amazon and Meta Platforms finished higher, helping limit broader market losses.
Oil Prices Surge As US-Iran Tensions Escalate
Energy markets became the biggest focus overnight after renewed geopolitical tensions in the Middle East.
Crude oil prices climbed sharply following reports of attacks on vessels near the Strait of Hormuz and further US action targeting Iran's oil exports.
West Texas Intermediate crude rose strongly during the session, supporting energy shares while increasing concerns about inflationary pressures across global markets.
The developments also contributed to higher market volatility and renewed interest in defensive sectors.
Bond Yields Continue Rising
US Treasury yields moved higher as investors adjusted expectations around inflation and monetary policy.
The benchmark US 10-year Treasury yield climbed to its highest level in several weeks, placing additional pressure on high-growth sectors that are generally more sensitive to higher interest rates.
Rising yields may continue influencing sentiment toward technology companies globally.
Sector Performance Overnight
Energy emerged as the strongest-performing US sector following the jump in oil prices.
Healthcare, real estate, utilities and consumer staples also finished higher as investors rotated toward defensive areas of the market.
Conversely, information technology, industrials and materials underperformed amid continued pressure on semiconductor companies and commodity-related shares.
Commodities Deliver Mixed Signals
Commodity markets produced mixed results overnight.
Oil strengthened significantly following geopolitical developments, while copper and gold both declined.
Copper's weakness may influence sentiment toward ASX Metal & Mining Stocks, particularly companies with significant exposure to industrial metals.
Gold prices also softened despite heightened geopolitical uncertainty.
What Could Drive The ASX Today?
Australian investors are likely to focus on several key themes during today's session.
Energy stocks
Higher crude oil prices may support oil and gas producers.
Technology sector
Weakness across global semiconductor companies could weigh on local technology shares.
Resources
Lower copper prices may pressure diversified miners and copper producers despite stronger energy markets.
Defensive sectors
Healthcare, utilities and consumer staples may attract increased attention following similar moves on Wall Street.
Corporate Spotlight
ResMed Ltd (ASX:RMD) announced plans to divest its MatrixCare software business to private equity firm Frazier Healthcare Partners.
The transaction forms part of the company's broader strategy to focus on sleep, breathing and connected home healthcare solutions, with completion expected during the first quarter of FY2027.
Broker Activity
Broker research released ahead of today's session included:
- Challenger Ltd (ASX:CGF) downgraded to Neutral by Macquarie.
- Orora Ltd (ASX:ORA) downgraded to Neutral by Macquarie.
- Regis Healthcare Ltd (ASX:REG) initiated with a Neutral rating by UBS.
What To Watch Next
Market participants are likely to continue monitoring:
- Developments surrounding the US-Iran conflict.
- Oil price movements.
- Semiconductor sector performance.
- US bond yields.
- Commodity price trends.
These factors may continue influencing trading sentiment across Australian equities in the near term.
The ASX appears set for a cautious start after weakness across global technology shares and renewed geopolitical tensions unsettled overseas markets. While stronger oil prices may support energy producers, pressure on semiconductor companies, industrial metals and rising bond yields could weigh on broader market sentiment. Investors are likely to remain focused on developments in global markets as the Australian trading session unfolds.
