Australian shares are set to recoup some of their losses in a stronger start on Tuesday despite a mixed night on Wall Street.
The ASX 200 index is likely to begin 0.13% higher than the previous close, based on trading on the Australian Securities Exchange (ASX), which priced the June contract 11 points over the previous settlement at 8,500 points.
This sets the market up to regain a portion of the 55.3 points it gave away on Monday as the United States and Israel's war on Iran continued to affect investor confidence.
Two of the three main U.S. equity benchmarks closed lower on Monday (Tuesday AEDT) as higher crude oil prices and rising Middle East tensions counteracted hopes about a diplomatic end to the war.
While the Dow Jones Industrial Average put on 0.1%, the S&P 500 lost 0.4%, and the Nasdaq Composite gave up 0.7%.
U.S. President Donald Trump said his government was talking to a "more reasonable regime" to end the war, but continued to threaten Iran with attacks on oil wells and power stations if it kept the crucial Strait of Hormuz oil shipping lane closed.
"The administration continues to send mixed messages," Cherry Lane Investments partner Rick Meckler was quoted as saying in a Reuters article.
"When the messages seem good, to the extent they are believed, it helps the market. If something they say implies a more aggressive approach, the market sells off."
The Australian market had finished down on Monday with the ASX 200 losing 0.7% to 8,461.0 points.
In fixed interest markets, yields on Australian Government bonds rose as two-year rates added 0.30% to 4.697% and 10-year rates put on 0.32% to 5.044% at the time of writing.
