ASX 200 futures were up 56 points (+0.65%) at 9:45 am AEDT on Tuesday, signalling a stronger open after the local market slid to fresh 2026 lows on Monday. The bounce follows a more positive lead from Wall Street overnight as oil prices retreated from recent spikes.
Still, caution remains high ahead of today’s Reserve Bank of Australia interest rate decision, with markets widely expecting policymakers to lift the cash rate by 25 basis points to 4.10%.
Wall Street rebounds as oil retreats
US stocks began the week on firmer footing, although gains faded slightly into the close.
The S&P 500 rose 1.01%, the Dow Jones gained 0.83%, and the Nasdaq climbed 1.22%, with technology and consumer discretionary stocks leading the advance. All 11 major sectors finished higher, suggesting a broad-based recovery after the sharp volatility seen last week.
The move came as oil prices pulled back from earlier highs. WTI crude fell more than 5% to around US$94 a barrel after briefly topping US$102 earlier in the session. The drop followed comments from the White House suggesting a coalition of countries may soon be announced to help escort tankers through the Strait of Hormuz.
While that offered markets some relief, uncertainty around the conflict remains high. Reports indicate energy infrastructure in the region continues to face attacks, and oil flows through the Gulf remain heavily disrupted.
The easing in crude prices helped calm volatility across markets. The VIX index dropped more than 13%, while bond yields also edged lower after last week’s sharp climb.
ASX slips to four-month low
Locally, the S&P/ASX 200 fell 0.39% on Monday to 8,583, its lowest level of the year so far, as investors remained cautious ahead of the RBA meeting and ongoing geopolitical tensions.
Defensive sectors led the market. Consumer staples rose 0.81%, utilities gained 0.79%, and energy stocks added 0.53% as oil prices remained elevated.
Resources stocks moved the other way. Materials dropped 2.22%, while the ASX All Tech index fell 1.31%, highlighting the pressure on growth sectors as bond yields pushed higher.
Small caps were also weaker, with the Small Ordinaries down 1.56% and the Emerging Companies index sliding 2.63%, reflecting a broader pullback in risk appetite.
Among individual stocks, Reliance Worldwide rallied nearly 7% after announcing a $120 million share buyback, while Lynas Rare Earths rose 1.4% after securing a supply agreement with the US Department of Defence.
Commodities and currencies
Oil continues to dominate the global macro narrative, even after the latest pullback.
Energy markets remain tight, with Middle East exports reportedly down sharply and tanker movements through the Strait of Hormuz still heavily restricted. The International Energy Agency has indicated it could release further emergency reserves if supply disruptions worsen.
Despite those concerns, the retreat in oil prices helped stabilise broader commodity markets. Copper rose about 1.4%, while iron ore held steady above US$105 per tonne. Gold slipped slightly to around US$5,006 per ounce.
In currency markets, the Australian dollar hovered near US70.7 cents, recovering modestly alongside improved risk sentiment. Crypto assets also rallied, with bitcoin climbing above US$74,000.
What to watch today
The key event for the local market today is the RBA’s interest rate decision, due at 2:30 pm AEDT. Markets are currently pricing a strong probability of a 25-basis-point hike, with some economists expecting further tightening later in the year depending on how the energy shock feeds into inflation.
Investors will also continue watching developments in the Middle East, where the outlook for oil supply remains highly uncertain.
Corporate news flow on the ASX includes updates from New Hope, which reported a first-half net profit of $54.3 million and declared a 10-cent interim dividend, while West African Resources posted strong annual earnings alongside a large cash and bullion position.
Meanwhile, several broker updates have turned attention back to the gold sector, with a number of Australian producers receiving new buy ratings from analysts.
For now, the overnight rebound suggests the ASX may start the session on firmer ground. But with oil markets still volatile and the RBA poised to move on interest rates, traders are likely to remain cautious as the week unfolds.
