Australian shares are expected to face a volatile start to the week after the United States and Iran exchanged fresh military strikes over the weekend, heightening geopolitical tensions and threatening to push energy prices higher ahead of the August reporting season.
At Friday's close, ASX futures pointed to a 54-point, or 0.6%, rise for the S&P/ASX 200 at Monday's open.
However, that indication came before U.S. President Donald Trump authorised strikes in retaliation for Tehran's attack on Jordan, which killed two U.S. military personnel and left another missing.
The latest escalation in the Middle East is expected to add another layer of uncertainty for investors already grappling with renewed weakness in technology stocks.
Wall Street also endured a sharp sell-off late last week as investors dumped semiconductor companies, fuelling concerns that valuations across the sector may have run too far ahead of fundamentals.
The Dow Jones Industrial Average fell 406.6 points, or 0.8%, to 52,146.4 on Friday. The S&P 500 declined 76.1 points, or 1.0%, to 7,457.7, while the Nasdaq Composite dropped 361.7 points, or 1.4%, to 25,520.2.
"It's like the market has chip fatigue," said Ryan Detrick, chief market strategist at Carson Group in Omaha, Nebraska told Reuters.
"Chip stocks are down three of the last four weeks, and it's the same worries, the same concerns; those stocks got way ahead of themselves, and now they're coming back to Earth."
The Australian sharemarket finished Friday's session in the red amid weakness in mining and technology stocks.
The S&P/ASX 200 Index fell 44.0 points, or 0.5%, to 8,796.7, with four of the 11 sectors finishing in negative territory.
Ahead in the week, attention will turn to Australia's labour market data, which could influence expectations for the Reserve Bank of Australia's interest rate outlook.
Markets expect employment to increase by 15,000 jobs, while the unemployment rate is forecast to remain steady at 4.4%.
On the bond markets, Australian 10-year and two-year government bond yields rose 0.7% and 1.0%, respectively, to 4.955% and 4.583%.
