Australian shares are expected to open lower on Tuesday after a reasonable night on Wall Street as the renewed Middle East conflict dominates attention.
The ASX 200 index was set to begin 0.21% below the previous close at 10:00 am AEDT (11:00 pm GMT Monday), based on futures market trading, which priced the March contract 20 points under the previous settlement at 9,137 points.
It was a mixed night in New York, where two of the three main benchmarks eked out tiny gains as investors monitored U.S. and Israeli military action against Iran, rising oil prices and rising inflation pressures.
While the Dow Jones Industrial Average dipped 0.2%, the S&P 500 added 0.04%, and the Nasdaq Composite put on 0.4%.
F/m Investments CEO Alex Morris said confidence in U.S. markets and high hopes for the benefits of artificial intelligence countered worries about surging oil prices and geopolitical turmoil.
“The overall action in the Middle East does not have a tremendous impact on the average American stock the way we measure,” he was quoted as saying in a Reuters article.
"I just don't think the average market participant is that moved by the conflict
Global oil prices surged on Monday on news that the Strait of Hormuz, which carries 20% of the world's oil supplies, was closed and Iran vowed to set fire to ships trying to pass, with Brent crude futures rising 9% higher to US$79.26 a barrel.
Morgans Financial private client adviser Lachlan Walsh said the firm was advising clients not to respond to the fluctuations in the oil price, which dropped as quickly as it rose.
“It’s something we stay away from,” he said.
But Walsh said software companies were attracting buying interest in the belief they had fallen too far in the recent sell-off of growth stocks, with some down as much as 50%.
“There’s a lot of interest out there. I think you’ve seen it bottoming out,” he said.
The Australian market managed another record close on Monday, but the rising tensions in the Middle East limited the gain to 2.3 points as the ASX 200 finished at 9,200 with oil and gold companies performing best.
In fixed interest markets, Australian Government bond yields dipped with two-year rates off by 0.02% at 4.25% and 10 year rates down 0.17% at 4.726%.
