Source: Kapitales ResearchHeadline

• ASX 200 futures indicate a firmer start, rising 54 points (+0.61%), despite a broad selloff across US equities as weakness in technology and semiconductor stocks weighed on Wall Street.
• US markets ended sharply lower, with growth stocks under pressure while Energy was the only S&P 500 sector to finish in positive territory.
• A fresh wave of selling in global semiconductor shares followed the launch of China's Moonshot AI Kimi K3 model, fuelling concerns over AI infrastructure spending, pricing pressure and future returns.
• Escalating military conflict between the US and Iran, including renewed strikes and disruptions around the Strait of Hormuz, drove oil prices sharply higher and lifted geopolitical risk.
• Investors remain focused on the upcoming earnings season, with results from major US technology companies expected to test whether elevated AI-related capital expenditure can continue to support valuations.

Global Markets Overview

Global equity markets delivered a mixed performance as renewed weakness in technology and semiconductor stocks weighed heavily on investor sentiment. US markets closed broadly lower, with the Nasdaq Composite declining 1.40%, while the S&P 500 and Dow Jones fell 1.01% and 0.77%, respectively. In Europe, the FTSE 100 posted a modest gain of 0.27%, supported by defensive sectors. Canada's S&P/TSX Composite slipped 0.22%, reflecting softer risk appetite. Across Asia, Japan's Nikkei 225 tumbled 4.03%, marking the sharpest decline among major indices amid a broad technology-led selloff, while India's benchmark index advanced 1.25% on resilient domestic sentiment. Meanwhile, New Zealand's NZX 50 gained 0.58%, outperforming most regional peers. Overall, markets remained cautious as investors assessed escalating geopolitical tensions, uncertainty surrounding AI spending, and the outlook for upcoming corporate earnings.Commodities & Crypto

Commodity markets traded mostly higher, led by a sharp rise in crude oil as escalating Middle East tensions intensified concerns over supply disruptions through the Strait of Hormuz. WTI crude surged 4.48% to US$82.49 per barrel, potentially supporting ASX-listed energy producers. Gold advanced 1.03% to US$4,016.95 per ounce, while silver gained 0.25% to US$56.32 per ounce as investors increased exposure to defensive assets.Industrial commodities remained under pressure, with copper slipping 0.19% to US$6.21 per pound amid weaker global risk sentiment and technology-sector volatility. Uranium declined 1.29% to US$5,124.48, which may weigh on uranium-focused equities. Bitcoin eased 0.69% to US$64,317, reflecting reduced demand for risk-sensitive assets.Bond Yields

Global bond markets delivered a mixed performance as investors balanced escalating geopolitical risks against evolving monetary policy expectations. Australia's 10-year government bond yield edged slightly higher, indicating that domestic markets continue to price in a relatively restrictive interest rate environment. In the United States, the 10-year Treasury yield rose to 4.571%, reflecting persistent inflation concerns and expectations that the Federal Reserve may maintain a cautious policy stance. Meanwhile, the 30-year Treasury yield eased modestly, suggesting continued demand for longer-duration safe-haven assets. Japan’s 10-year government bond yield eased marginally but remained elevated at 2.710%, reflecting continued expectations of gradual monetary policy normalisation by the Bank of Japan. Overall, fixed-income markets remain highly sensitive to inflation data, central bank guidance and geopolitical developments.Key Drivers

• US equities finished lower as technology, airlines, retailers, and homebuilders extended losses while Energy remained the strongest-performing sector.
• The Philadelphia Semiconductor Index fell 1.6%, extending its decline to 21.6% below its 22 June peak, officially entering bear market territory despite remaining approximately 62% higher year-to-date.
• China's Moonshot AI launched its open-weight Kimi K3 model, intensifying fears that lower AI costs could reduce future demand for high-end semiconductor infrastructure.
• Major technology companies declined, including SpaceX (-5.4%), Meta (-2.7%), Tesla (-2.6%), Nvidia (-2.2%) and Alphabet (-2.1%).
• Brent crude extended its rally as renewed attacks involving Iran and continued disruption around the Strait of Hormuz heightened supply concerns.
• Investors are increasingly focused on upcoming earnings from Alphabet, Microsoft, Amazon and Meta, with AI-related capital expenditure expected to remain a central theme.
• Cleveland Fed Hammack indicated inflation remains elevated, suggesting further policy tightening cannot be ruled out if price pressures persist.

ASX Company News

• Fletcher Building Limited (ASX: FBU): The New Zealand Government will provide up to NZ$60 million to support Golden Bay Cement's Northland operations, while the company has committed to invest at least NZ$150 million through 2040, strengthening domestic cement manufacturing and long-term supply chain resilience.
• Deep Yellow Limited (ASX: DYL): Deep Yellow awarded two major civil and concrete construction contracts worth approximately AU$34 million for its Tumas uranium project in Namibia, marking another milestone in de-risking the project ahead of the planned Final Investment Decision in Q4 CY2026.
• South32 (ASX: S32): South32 exceeded FY26 production guidance across several operations and continued its strategic transition toward base metals, supported by the announced sale of its aluminium value chain assets to Alcoa for an implied enterprise value of up to US$5.6 billion.

Key Economic Drivers (What to Watch Today)

• No major economic data releases are scheduled today.
• Investors will closely monitor developments in the US-Iran conflict, particularly around the Strait of Hormuz, for potential impacts on global energy markets.
• Corporate earnings from major US technology companies later this week are expected to shape sentiment toward AI spending and semiconductor valuations.
• Defensive sectors, including healthcare, consumer staples and utilities, may attract stronger investor interest amid heightened market uncertainty.
• Continued volatility across global semiconductor stocks and movements in crude oil prices are likely to influence trading across the Australian market.

Summary 

• ASX 200 futures point to a stronger opening, although elevated global uncertainty may keep intraday volatility high.
• Technology and semiconductor stocks are likely to remain under pressure as investors reassess AI infrastructure spending expectations.
• Defensive sectors may continue to attract capital as investors rotate away from higher-risk growth assets.
• Stronger oil prices may support energy producers and related service companies.
• Gold's advance may provide support to ASX-listed precious metals producers.
• Rising US 10-year Treasury yields may pressure equity valuations, particularly in high-growth sectors.
• Escalating US-Iran tensions remain a key risk for energy prices, shipping activity and global sentiment.
• Overall market conditions remain volatile, favouring selective exposure, disciplined risk management and a cautious investment approach.

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