The Australian sharemarket is poised to edge higher at the open after Wall Street staged a largely subdued session, holding just shy of its all-time high as oil prices pulled back from recent peaks and robust corporate earnings continued to underpin investor confidence.
ASX futures pointed to a gain of 24 points, or 0.3 per cent, at the open, building on Tuesday's local session which also added 0.3 per cent. The Australian dollar was changing hands at US71.12¢. For broader context on the drivers behind local market performance, see our earlier coverage of ASX gains amid surging oil prices.
Wall Street Steady Near Record Territory
US markets traded in a narrow range overnight, with the S&P 500 adding 0.1 per cent and sitting just 0.4 per cent below its all-time high set last month. The Nasdaq composite fared better, rising 0.4 per cent to extend its own record. The Dow Jones Industrial Average was the laggard of the three major indices, slipping 168 points, or 0.3 per cent, in mid-afternoon trade.
Energy and financial stocks weighed on the broader market. Oil and gas companies came under pressure as crude prices retreated, while banks continued a weak run that has persisted since the Federal Reserve lifted its overnight interest rate for the first time in three years last week. JPMorgan Chase fell 3.1 per cent, making it one of the heaviest drags on the S&P 500. When the gap between short-term and long-term interest rates narrows, banks face a squeeze on their profit margins — and that dynamic remained firmly in play.
The 10-year US Treasury yield held steady at 4.96 per cent, well above the 3.97 per cent level it sat at before the conflict with Iran began, adding to pressure on rate-sensitive sectors. You can read more about how rate fears and soaring oil have weighed on Wall Street in recent sessions.
Oil Prices Retreat but Remain Elevated
Crude oil prices gave back some ground overnight, with Brent briefly dipping below $US98 a barrel before trimming losses to settle around $US99.66. While that marks a notable decline from the nearly $US110 touched last week, prices remain sharply elevated compared with the $US72 per barrel Brent was fetching before the war with Iran erupted. Uncertainty about when Middle Eastern supply will flow freely again continues to drive volatile swings in the oil market.
The fall in crude weighed on energy stocks, with ConocoPhillips dropping 1.7 per cent.
Strong Corporate Earnings Prop Up Sentiment
Despite the headwinds from oil and interest rates, robust profit results from a range of companies helped keep markets near historic highs. AutoZone climbed 6.1 per cent after the auto parts retailer posted a stronger-than-expected quarterly profit, even as revenue fell short of forecasts. Its chief executive acknowledged a "difficult selling environment" in the first two months of the quarter but expressed confidence in the company's positioning for sales growth in the year ahead.
Recreational vehicle maker Thor Industries rose 5.1 per cent after also beating profit expectations, though its chief executive was candid about ongoing consumer stress, noting that expensive fuel, high interest rates and persistent inflation are stretching customers' budgets and that business had not reached the recovery point many in the industry had anticipated.
Swiss sportswear brand On Holding jumped 8.8 per cent after the company outlined its financial targets for coming years and announced a plan to buy back up to $US1 billion of its own shares through to 2029.
Analysts are forecasting that companies in the S&P 500 will collectively report earnings growth of nearly 29 per cent for the third quarter compared with the same period a year ago — which would mark the third consecutive quarter of growth exceeding 25 per cent. Over the long term, stock prices tend to track the trajectory of corporate profits, a dynamic that has helped sustain the market's resilience. The Economy of Australia also faces some of the same global crosscurrents, including elevated energy costs and the flow-on effects of higher interest rates worldwide.
Global Markets Broadly Higher
Across Europe and Asia, sharemarkets mostly ticked upward overnight. London's FTSE 100 was an exception, dipping 0.3 per cent, while most other regional indices ended the session in positive territory.
