The morning catch up: ASX 200 set for flat open as oil retreats and geopolitics stabilise

The Australian share market is poised for a steady open on Wednesday, with ASX 200 futures up 5 points (+0.05%) as of 8:30 am AEST. Investors are digesting a fragile Israel-Iran ceasefire, a steep pullback in oil prices and a relief rally on Wall Street, while looking ahead to today’s May CPI print.

Overnight, US equities surged as a ceasefire between Israel and Iran appeared to hold despite a somewhat rocky start and Federal Reserve Chair Jerome Powell reiterated that the central bank is in no rush to change policy. Oil tumbled more than 5% on the truce, dragging energy stocks but boosting broader sentiment.

The S&P/ASX 200 closed 0.95% higher on Tuesday, snapping two sessions of mild losses, with materials and financials leading the advance.

Wall Street rallies on truce, Fed patience

US markets closed near best levels as the ceasefire news signalled possible easing of geopolitical tensions, with Powell striking a cautiously neutral tone during testimony to Congress.

The S&P 500 climbed 1.11%, edging within 1% of record highs, while the Nasdaq Composite jumped 1.43%, driven by strength in semiconductors and AI stocks. The Dow Jones Industrial Average rose 1.19%, boosted by travel and consumer names.

Tech stocks were among the top gainers, while airlines also rallied as crude oil prices fell. Powell said the central bank can afford to wait for more data before cutting rates, but noted that easing may come “sooner rather than later” if inflation pressures remain contained.

ASX set to consolidate after gains

The ASX is expected to consolidate after Tuesday’s rally, with market participants awaiting the May CPI release. Tuesday’s session saw broad-based gains, with materials (+2.0%) and financials (+1.9%) leading the benchmark up 80.6 to close at 8,556.

Corporate news remained active across sectors on Tuesday. Reports suggest Carlyle had been circling Australian energy assets, including Santos, ahead of its role in the current takeover push. SmartPay agreed to a NZ$1.20-per-share acquisition by US-based Shift4 Payments, matching a prior offer.

Defence tech firm Droneshield locked in $61.6 million in follow-on contracts from a European military client, while SRG Global announced $850 million in new work across energy, water, and infrastructure. Meanwhile, Paladin Energy said CEO Ian Purdy will step down in September, with COO Paul Hemburrow named as his successor.

Small cap highlights

The ASX Small Ordinaries index added 0.77% to 3,215.30 in Tuesday trading. In small-caps action today:

1. Astral Resources NL (ASX:AAR) released a positive PFS for its Mandilla Gold Project near Kalgoorlie, forecasting average annual output of 95,000 ounces over the first 12 years and a pre-tax NPV8 of $4 billion at a $4,250/oz gold price.
2. Dynamic Metals Ltd (ASX:DYM) completed soil sampling at its Courvoisier prospect in WA’s Widgiemooltha region, with results due in late July and RC drilling to follow at nearby Chalice South.
3. Evion Group NL (ASX:EVG, OTC:EVIGF) secured a maiden 80-tonne expandable graphite shipment to a US offtake partner, expected to generate ~$400,000 in revenue from its JV facility in India.
4. Firebird Metals Ltd (ASX:FRB, OTC:FRBMF) reported strong LMFP cathode test results, exceeding Chinese industry benchmarks and progressing toward a pilot plant capable of producing 1 tonne/day.

Commodities and currencies

Oil prices fell sharply on easing war risks, with WTI crude sinking 6.04% to US$64.37 a barrel and Brent down 6.1% to US$67.14.

• Gold lost 1.35% to US$3,322.94/oz as safe haven demand ebbed
• Copper edged up 0.25% to US$4.89/lb
• Iron ore held near US$94.63/t

In currency markets, the Aussie dollar gained 0.48% to US$0.649 on improved risk appetite. Bitcoin rose 1.43% to US$105,854.

On the radar today

All eyes are on Australia’s May monthly CPI, due at 11:30 am AEST. Economists expect headline inflation to slow slightly to 2.3% year-on-year. A softer-than-expected print could revive rate cut speculation.

Meanwhile, Infragreen Group is due to list in an initial public offering at 11:00 am AEST.

Powell’s second day of testimony continues tonight; investors will watch for any shift in tone. Finally, several REITs, including HomeCo (HDN), Charter Hall (CLW, CQR) and National Storage (NSR), go ex-dividend later this week.