The Australian sharemarket anticipates a fresh start with the new financial year, as futures indicate a modest 0.2 per cent rise for the S&P/ASX 200 on Monday. But this potential uplift is tempered by Middle East tensions and Wall Street tech volatility, with these global factors threatening to introduce fresh jitters across the local exchange.
Geopolitical developments are front of mind, with US strikes on Iran following an apparent attack in the Strait of Hormuz sparking fears of a resurgent energy supply crunch. Emanuel Datt of Datt Capital noted, “All eyes will be on the Middle East, more focused towards the tangible instead of the AI theme.” Local traders also monitor Wall Street, where the S&P 500 fell two per cent and the Nasdaq 4.5 per cent last week, amidst scrutiny over AI firms’ capital expenditure versus returns.
Despite international challenges, Mr Datt expressed optimism for the local exchange from this week, anticipating significant market strength from July to September. This is attributed to the close of ASX’s tax-loss selling, with investors clearing their decks for the new financial year. Domestically, traders will pore over minutes from the Reserve Bank board’s June meeting for insights into economic conditions and the potential for further interest rate rises to tame inflation.
Treasury revised its headline inflation forecast to a mid-year peak of 4.25 per cent, down from five per cent, after mixed economic data. Internationally, a US employment report and Federal Reserve chairman Kevin Warsh’s speech will be watched for US rate hike signs, which could pressure highly valued tech companies, noted Ten Cap’s Jun Bei Liu. While Brent crude fell to pre-war levels, Barclays’ Christian Keller warns this decline may be temporary.
