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Highlights
ASX futures suggest a weaker start amid global geopolitical jitters
European equities fell as central banks hold policy steady amid inflation concerns
Rising oil prices and tensions in the Middle East heighten market caution
The Australian share market is preparing for a weaker open as futures signal a subdued start for the ASX 200. The energy sector is expected to draw attention following fresh gains in global crude benchmarks, driven by concerns over supply security in the Middle East.
Traders will likely monitor oil-linked companies on the All Ordinaries as geopolitical developments continue to influence sentiment across global commodities and equities.
European Markets Slide Following BoE Policy Decision
Overnight, European markets recorded broad-based declines after the Bank of England opted to keep its benchmark interest rate steady. The move came amid growing signs of labour market softness in the UK, but with inflation pressures lingering, the policy stance reflected continued caution.
Indices across the region, including Germany’s DAX and France’s CAC, declined, while London’s FTSE followed suit. The decision revealed divisions within the central bank, with some policymakers reportedly favouring a rate cut.
The lack of alignment within the Bank of England’s board is contributing to volatility, as traders weigh the implications for broader European economic momentum.
Oil Markets React to Escalating Middle East Tensions
Global oil benchmarks climbed higher, with Brent crude leading the upward movement. Supply fears intensified after recent military action in the region, compounded by ambiguous comments from former U.S. President Donald Trump regarding a potential intervention.
Energy traders are now pricing in a larger geopolitical premium, amid concerns that any disruption to Iran’s oil exports or the Strait of Hormuz could significantly reduce global supply capacity.
This dynamic has prompted renewed caution among equity investors, particularly those exposed to fuel-intensive or emerging market sectors that may be more sensitive to commodity shocks.
Caution Builds Ahead of US Data and EU-Iran Talks
With Wall Street closed in observance of Juneteenth, attention shifts to upcoming data and diplomatic engagements. The U.S. is scheduled to release its Philly Fed index and leading economic indicators later in the day.
In Asia, Japan’s consumer price index will be released alongside a scheduled speech from the Bank of Japan Governor. These inputs could influence regional sentiment before the ASX session resumes.
Meanwhile, behind closed doors in Geneva, representatives from the EU, UK and Iran are convening for exploratory discussions on nuclear policy. Any outcomes from these talks may further affect risk appetite globally.
Currency and Commodity Prices Reflect Mixed Sentiment
Across the commodity spectrum, prices displayed a fragmented picture. While gold remained relatively flat, base metals like copper and nickel weakened. Iron ore prices eased marginally, while lithium carbonate steadied.
In currency markets, the Australian dollar slipped against the U.S. dollar, echoing broader uncertainty. Digital assets also edged lower, with bitcoin reflecting light profit-taking and reduced momentum.
