Source: Kapitales ResearchHeadline

• ASX 200 futures point to a weaker open after Wall Street retreated sharply following the Federal Reserve's latest policy announcement.
• US markets declined after the Federal Reserve kept rates unchanged at 3.50%-3.75%, while policymakers signalled the possibility of a rate hike by the end of 2026.
• The US dollar and Treasury yields moved higher following the Fed meeting, with the 2-year yield rising to 4.18%, its highest level since February 2025, while gold fell 1.7%.
• Brent crude dropped for a fifth straight session to around US$78 per barrel as progress in US-Iran negotiations increased expectations of additional oil supply.

Global Markets Overview

Global equity markets closed mixed overnight, with US benchmarks retreating after the Federal Reserve maintained interest rates at 3.50%-3.75% and signalled a more restrictive policy stance through its updated economic projections. The S&P 500, Nasdaq Composite and Dow Jones declined 1.21%, 1.34% and 0.98%, respectively, as higher Treasury yields and expectations of prolonged monetary tightening weighed on risk sentiment. Outside the US, performance was mixed. The FTSE 100 gained 0.14%, while Japan's Nikkei 225 and India advanced 0.72% and 0.45%, respectively. In contrast, Canada's S&P/TSX Composite and New Zealand's NZX 50 declined 0.75% and 0.25%, respectively. Investor focus remained centred on the implications of the Fed's hawkish outlook, although easing Middle East tensions provided some support to broader market sentiment.Commodities & Crypto

Commodity markets weakened overnight as a stronger US dollar and rising Treasury yields reduced demand for risk-sensitive and non-yielding assets. Gold fell 1.66% to US$4,259.62 per ounce, while silver declined 2.78%, reflecting pressure from higher real yields following the Federal Reserve's hawkish policy signals. Copper dropped 2.19% amid concerns that tighter monetary conditions could weigh on global industrial demand.Energy markets remained under pressure, with WTI crude easing 0.68% to US$75.65 per barrel as expectations of additional Iranian oil supply continued to weigh on prices. Uranium also declined 1.47%, while Bitcoin fell 2.48% as investors reduced exposure to risk assets following the Fed meeting and subsequent rise in bond yields.Overall, commodity and cryptocurrency markets traded lower overnight as a stronger US dollar and rising Treasury yields weighed on investor sentiment following the Federal Reserve's hawkish policy outlook. Bond Yields

Bond markets reflected a cautious stance following the Federal Reserve's hawkish policy update. US Treasury yields moved higher, with the 10-year yield rising to 4.483% and the 30-year yield edging up to 4.929%, as investors adjusted expectations for a potentially prolonged period of restrictive monetary policy. Australia's 10-year government bond yield also increased to 4.803%, while Japan's 10-year bond yield remained elevated at 2.604%. Overall, higher sovereign yields indicate continued market sensitivity to inflation risks and central bank policy expectations.Key Drivers 

• Federal Reserve maintained the policy rate at 3.50%–3.75% while signalling a more restrictive outlook for 2026.
• US retail sales exceeded expectations, highlighting resilient consumer spending.
• Brent crude moved towards a three-month low amid expectations of increased Iranian oil exports.
• The US and Iran are expected to finalise a memorandum of understanding in Geneva later this week.
• Despite diplomatic progress, geopolitical risks remain elevated as Israel rejected calls to withdraw forces from southern Lebanon and continued limited military operations in the region.
• Iran warned that further Israeli military activity in Lebanon could undermine the emerging agreement and complicate ongoing negotiations.
• US President Donald Trump stated that the proposed agreement remains unfinished and suggested military action could resume if final terms are not satisfactory.
• BMW reduced its earnings outlook due to weaker Chinese demand and supply-chain disruptions.

ASX Company News

• PMET Resources Inc. (ASX: PMT) signed a memorandum of understanding with Mitsui & Co. and Microwave Chemical Co. to evaluate microwave calcination technology for on-site lithium refining at its Shaakichiuwaanaan Project in Québec. The initiative supports PMET's strategy to produce higher-value lithium products, improve supply chain resilience and leverage Québec's renewable hydroelectric power for downstream processing.
• Washington H. Soul Pattinson And Company Limited (ASX: SOL) agreed to divest certain Brickworks Industrial Joint Venture property interests to Goodman Australia Industrial Partnership and Goodman Group entities for net proceeds of approximately AU$1.89 billion. The transaction is expected to enhance capital flexibility and provide additional liquidity for future investment opportunities while retaining its interest in the Brickworks Manufacturing Trust.

Key Economic Drivers (What to Watch Today)

• Federal Reserve impact: Markets will continue assessing the Fed’s hawkish policy tone after rates were held, with the updated dot plot signalling a possible 2026 rate hike. 
• Higher yields and stronger US dollar: Rising US bond yields and a firmer dollar may weigh on equities, commodities and interest-rate-sensitive sectors. 
• Commodity weakness: Gold, copper, silver and energy prices remain under pressure, which could impact ASX resource and mining stocks. 
• Bank of England decision: Investors will watch the BoE rate decision at 9:00 PM AEST for further signals on global central bank policy direction.

Summary 

• ASX 200 futures point to a weaker open following weakness across US equity markets.
• Lower oil prices may provide support for transportation and consumer-focused businesses if the trend persists.
• The Federal Reserve's updated projections suggest monetary policy may remain restrictive for longer than previously expected.
• Investors may continue favouring businesses with strong balance sheets, stable cash flows and pricing power amid evolving macroeconomic conditions.
• A stronger US dollar and rising bond yields may create near-term pressure on commodity-linked sectors.
• Gold and base-metal producers could face sentiment headwinds after sharp declines in underlying commodity prices.
• Market attention is likely to remain focused on central bank commentary, inflation expectations and global growth indicators over the coming weeks.

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