The Australian sharemarket is set to fall past four month lows when trading resumes on Friday after United States stocks dropped to similar levels on worries that the inflationary impact of surging oil prices would limit the chances of more interest rate cuts.
The ASX should open down 0.06% when the Australian Securities Exchange (ASX) opens at 10:00 am AEDT (11:00 pm GMT Thursday), according to futures trading, which priced the June share price index contract five points below the prior settlement at 8,530 points.
Burrell Stockbroking wealth adviser Adam Dight said he was advising clients whose portfolios had been built for any situation to “sit it and do nothing” because the volatile Middle East conflict made it difficult to invest.
“Diversification is what saves you in the end. If you have more money and you can stomach the volatility, just keep averaging in,” he said.
Dight recommended selling energy stocks like Woodside Energy (ASX: WDS) and buying property trusts and Washington H. Soul Pattinson and Company (ASX: SOL).
Property trusts like Goodman Group (ASX: GMG), Scentre Group (ASX: SCG), Stockland (ASX: SGP), GPT Group (ASX: GPT) and Charter Hall Group (ASX: CHC) represented good value after being heavily sold off.
The direction for the ASX was set on Wall Street, where equities benchmarks fell to four-month lows amid signs that the continuing United States and Israel war against Iran may mean interest rates will be higher than previously expected.
The Dow Jones Industrial Average dropped 0.4%, and the S&P 500 fell 0.3%, both to their lowest closes since 21 November 2025, and the Nasdaq Composite shed 0.3% to its lowest level since 20 November.
The Bank of England and European Central Bank kept interest rates unchanged on Thursday, a day after the Federal Reserve did the same and Chair Jerome Powell warned the economic outlook remained uncertain as soaring energy prices raised fears of inflation.
"The market is digesting a little bit more of Powell and what some other central banks said overnight, that this is a real inflation risk," Horizon Investments Head of Research and Quantitative Strategies Mike Dickson was quoted in a Reuters story as saying.
The Australian sharemarket had fallen to a four-month low on Thursday as soaring oil prices raised expectations of higher than expected interest rates, with the market benchmark shedding 1.7% to 8,497.8 points.
In fixed interest markets, Australian Government bond yields dropped as two-year rates lost 0.30% to 4.688% and 10 year rates edged down by 0.12% to 5.003% at the time of writing.
