Australian shares are set for an opening drop of more than 1 per cent as oil spiked toward the $US110 a barrel mark after Israel struck Iran’s South Pars gas field and Iran responded by posting a list of regional energy targets.
Facilities in Qatar, Saudi Arabia and the United Arab Emirates are on a list of sites at risk of Tehran’s airstrikes, the semi-official Tasnim news agency reported. Attacks on Iran’s energy infrastructure “will not go unanswered,” Fars reported separately.
Eurasia Group’s Ian Bremmer said Israel’s attack on Iranian energy facilities, which were apparently coordinated with the US, mark “a meaningful escalation” in the war.
ASX 200 futures were pointing down 94 points or 1.1 per cent to 8595 near 3.45am AEDT. The S&P 500 slid 0.6 per cent at 12.45pm in New York, with consumer staples pacing nine of its 11 industry sectors lower.
Ahead lies a policy statement from the Federal Reserve at 5am AEDT and Jerome Powell’s press conference a half hour later. Markets have moved aggressively to price-out Fed rate cuts as oil prices increased.
In a note, Citi economists said markets are “misunderstanding” how the Fed will react. “Powell will acknowledge that upside risks to inflation have increased, but this should be balanced by on average zero job growth increasing downside risk to employment.
”We expect the median ‘dot’ to continue to show one 25 basis points cut this year. In our base case the Fed cuts 75bp this year with 25bp cuts in June, July and September.”
Oil surged as high as $US109.84 a barrel in morning trade in New York before easing to trade back below $US109.
Market highlights
ASX 200 futures are pointing down 94 points or 1.1 per cent to 8595.
All US prices near 12.45pm New York time.
- AUD -0.4% to US70.79¢
- Bitcoin -3.9% to $US71,335
- On Wall St: Dow -0.9% S&P -0.6% Nasdaq -0.7%
- VIX +1.16 to 23.53
- Gold -2.5% to $US4878.83 an ounce
- Brent oil +5% to $US108.58 a barrel
- Iron ore -1.3% to $US107.35 a tonne
- 10-year yield: US 4.22% Australia 4.89%
Today’s agenda
A busy Thursday calendar includes Australian February jobs data at 11.30am. NAB expects the unemployment rate to hold at 4.1 per cent, with employment growth of around 30,000 (Consensus 4.1%/20k).
“This release will be important for the RBA’s assessment of spare capacity in the labour market, with RBA’s Hauser recently noting that the economy has limited spare capacity, with unemployment coming in “a bit” below expectations and measures of labour demand a little higher.
“If unemployment remains at 4.1%, this would do little to ease the RBA’s concerns around labour market tightness. By contrast, a print of 4.2% would ease concern the labour market may be tighter still than their February assessment.”
Also on Thursday, NZ will release fourth-quarter GDP. Overseas, the Bank of England and European Central Bank hold policy meetings.
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