Australian shares opened lower on Friday despite a strong bounce back on Wall Street overnight, where technology stocks surged after easing tensions in the Middle East helped calm inflation concerns and boosted investor sentiment.
By 10:20 am AEST (12:20 am GMT), the ASX 200 index was trading 0.7% lower.
The main U.S. equities indexes posted solid gains on Thursday (Friday AEST) on the signing of an interim peace agreement between the United States and Iran, which reduced fears of a prolonged disruption to global energy supplies.
The Dow Jones Industrial Average added 0.1%, the S&P 500 leapt 1.1%, and the Nasdaq Composite soared 1.9%.
Although the U.S. market performed strongly, investors were also considering the comments of new Federal Reserve chairman Kevin Warsh, whose emphasis on controlling inflation prompted markets to increase expectations of interest rate rises.
"Markets got spooked by Warsh yesterday essentially promising to contain inflation," SignatureFD chief investment officer Tony Welch was quoted as saying in a Reuters article.
But easing oil prices and continued strength in U.S. corporate earnings and economic data continued to support the market, irrespective of any change in the Fed’s position, he said.
The reopening of the Strait of Hormuz to commercial traffic triggered a sharp fall in oil prices, which had previously surged following the outbreak of conflict in late February.
The Australian market had ended down on Thursday with the ASX 200 Index losing 0.6% to 8,911.1 points as expectations of higher U.S. rates prompted selling of technology, mining and energy stocks.
In fixed interest markets, yields on Australian Government bonds fell, with two-year rates down 0.91% to 4.487% and 10-year rates off 0.19% to 4.794% at the time of writing.
