Australian shares are expected to open lower on Thursday after escalating tensions in the Middle East triggered a sell-off on Wall Street and as higher oil prices revived worries about inflation and rising interest rates.
Australian Securities Exchange (ASX) futures trading pointed to the ASX 200 index starting 0.9% below the previous close, with the June share price index contract last priced down 75 points at 8,734 points.
ASX-listed companies are likely to track the direction of stocks, which pulled back in New York from record highs on Wednesday (Thursday AEST).
The Dow Jones Industrial Average dropped 1.2%, the S&P 500 dropped 0.7%, and the Nasdaq Composite shed 0.9% as investor sentiment was dampened by news that Iran had launched drone strikes on Kuwait.
But semiconductor stocks ignored the downbeat mood due to continued interest in artificial intelligence (AI).
"The AI names are trading on their own completely separate world, largely oblivious to macro and geopolitical risk, at least within reason," Baird investment strategy analyst Ross Mayfield was quoted saying in a Reuters story.
“And so there's going to be a bid for those names, especially on days where everything else looks a little bit less attractive."
The Australian market had rallied on Wednesday after softer-than-expected gross domestic product (GDP) data strengthened expectations the Reserve Bank of Australia (RBA) may pause its tightening cycle, with the ASX 200 adding 0.7% to close at 8,785.7 points.
Given that, market participants will be interested in the testimony of RBA Governor Michelle Bullock to the Senate today.
In fixed interest markets, Australian Government bond yields fell, with two-year rates dropping by 0.54% to 4.612% and 10-year rates easing by 0.28% to 4.92% at the time of writing.
