Source: Kapitales Research

Headline

• ASX 200 futures indicate a positive start, up 38 points (+0.43%), supported by positive global cues.
• US markets advanced to record highs, with the S&P 500 (+0.81%) and Nasdaq (+1.03%) driven by strong earnings and easing geopolitical concerns. 
• Oil prices declined sharply, with WTI falling 3.44% to US$102.68/bbl, as reassurance around the US-Iran ceasefire improved market sentiment.
• Geopolitical updates overnight featured parallel ceasefire announcements by Russia and Ukraine.

Global Markets Overview

Global equity markets delivered a mixed performance, with US benchmarks advancing firmly as the S&P 500, Nasdaq Composite, and Dow Jones closed higher, supported by continued strength in large-cap and technology-driven segments. In contrast, the United Kingdom index finished lower, reflecting continued pressure in the region. Canadian equities also edged down, while the NZX 50 declined, signaling softer sentiment across select developed markets.

In the Asia-Pacific region, Japan’s Nikkei posted a modest gain, whereas Indian equities moved lower. Overall, the divergence highlights region-specific dynamics, with US markets outperforming amid supportive earnings momentum and stable macro conditions, while other regions reflected a more cautious investor stance.

Commodities & Crypto

Commodity markets presented a non-uniform performance pattern, shaped by shifting macro and geopolitical signals. Energy markets softened as the immediate risk premium linked to geopolitical disruptions eased, leading to a pullback in crude prices. Precious metals, including gold and silver, witnessed renewed buying interest, supported by underlying macro uncertainty and selective defensive positioning, despite a relatively firm US dollar environment. Industrial metals such as copper moved higher, reflecting improving confidence in global demand recovery, particularly tied to infrastructure activity and stabilising manufacturing trends.

Uranium prices experienced a near-term retracement, indicative of profit-taking and a pause after the recent rally. Nonetheless, the medium- to long-term investment thesis remains intact, supported by structural drivers such as increasing nuclear capacity additions, energy security considerations, and policy alignment toward low-carbon energy sources. In the digital asset segment, Bitcoin sustained its upward trajectory, underpinned by strengthening market participation and improving risk sentiment.

Bond Yields

Global bond yields remained mixed across key markets. Australian 10-year yields edged slightly higher, indicating continued expectations of policy tightening. Japan’s 10-year yield remained largely unchanged, consistent with its accommodative stance. In the US, the 10-year Treasury yield eased modestly, suggesting some softening in inflation expectations, while the 30-year yield moved marginally higher. Overall, bond market movements reflect a cautious outlook, with investors balancing inflation trends and central bank policy signals.

Key Drivers

• Improving geopolitical backdrop: The US-Iran ceasefire remains intact, albeit fragile, helping to stabilise risk sentiment and reduce immediate energy supply disruptions. 
• Resilient economic indicators: US ISM Services activity remains in expansion territory, signalling ongoing economic strength, although elevated price pressures continue to highlight inflation persistence.
• Moderation in energy prices: A pullback in crude oil prices reflects a partial unwinding of geopolitical risk premiums, even as underlying supply conditions remain tight.
• Strong earnings trajectory: Better-than-expected quarterly results from companies such as AMD, Palantir, Pfizer, and Ferrari have reinforced confidence in corporate earnings durability.

1. ASX Company News

• Aurizon Holdings Limited (ASX: AZJ): Provided a business update and reaffirmed FY26 guidance ahead of the Macquarie Conference. Network volumes increased over the reporting period, supported by growth in bulk and containerised freight. The company continues to expect Group underlying EBITDA in the range of AU$1,680 million to AU$1,750 million, with operational performance supported by volume growth despite temporary fuel cost timing impacts. 
• Duratec Limited (ASX: DUR): Secured a contract valued at approximately AU$68 million for construction and commissioning works at the Darwin Ship Lift Facility. The project, scheduled to commence in June 2026, reinforces the company’s positioning in defence and marine infrastructure and is expected to contribute to long-term earnings visibility.

1. Key Economic Drivers (What to Watch Today)

• Economic data focus: The Australia Ai Group Industry Index (9:00 am AEST) will be closely watched for indications of industrial activity and broader economic momentum. 
• Monetary policy outlook: Markets are currently pricing in a 50% probability of the US Federal Reserve holding rates at 3.50%–3.75% by year-end, alongside a 32.1% probability of a 25-basis point rate hike. In Australia, the RBA has signalled a potential pause following three consecutive rate increases.

1. Summary 

• Energy price moderation is providing relief to inflation expectations, although underlying supply dynamics remain tight.
• Structural growth themes in AI, digital infrastructure, and energy transition continue to offer selective opportunities. 
• A balanced allocation strategy remains prudent amid evolving macro and geopolitical conditions. 
• Near-term market direction will be influenced by economic data releases and evolving monetary policy expectations, alongside continued geopolitical developments.

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