Australian shares are poised to open lower on Friday after Wall Street retreated and global bond yields climbed, with energy the only clear bright spot as oil prices extended their rally. SPI 200 futures settled approximately 0.3% weaker in overnight trade, pointing to a softer start for the S&P/ASX 200, which had snapped a six-session losing streak on Thursday.
The overnight session saw the S&P 500 fall 0.87%, the Nasdaq Composite shed 1.00%, and the Dow Jones Industrial Average drop 1.32%. The US 10-year Treasury yield rose 4.7 basis points to around 4.70%, while Australia's 10-year yield eased 5.2 basis points to 4.986%, offering only a partial cushion for rate-sensitive sectors.
Oil prices continued their advance, with Brent crude jumping 2.4% to US$93.78 a barrel and WTI climbing 2.3% to US$87.83. This marks a fifth consecutive gain, driven by ongoing geopolitical tensions in the Strait of Hormuz and broader supply concerns. The energy sector is set to outperform, with Woodside Energy, Santos, and refiners likely to benefit.
Gold held near elevated levels, with spot gold at US$4,516, while LME copper rose about 1.1% to US$14,333 per tonne. Iron ore was flat at US$95.16 per tonne, and Dalian futures eased, reflecting a lack of fresh stimulus from China after loan prime rates were left unchanged. China lithium carbonate fell 0.43%.
On the domestic front, Thursday's labour force data showed July employment fell by 15,800, pushing the unemployment rate up to 4.5% and participation down to 66.9%. This soft reading reduces the immediate risk of another Reserve Bank of Australia (RBA) rate hike, but also signals cooling demand. The cash rate stands at 4.35% after three increases in 2026, with the RBA still flagging the possibility of further tightening if inflation risks materialise.
Investors will be closely watching the 09:00 AEST release of flash PMI data and the publication of RBA Governor Michele Bullock's conference remarks. These could reset rate expectations and influence the Australian dollar, which was trading at US$0.7113, down 0.18%.
Banks are likely to remain a drag after all four major lenders fell more than 1% on Thursday. Consumer and transport stocks also face pressure following Walmart's 9.2% plunge, softer domestic employment, and higher fuel costs. Technology and REITs are challenged by Nasdaq weakness and the higher US 10-year yield.
Thursday's local cash session saw five sectors higher and six lower, with 187 ASX 300 advancers against 98 decliners. Leading movers included Zip Co (+18.22%), Sulzer (+15.05%), and Evolution Mining (+10.16%), while Iress (-20.74%), Downer EDI (-10.34%), and CBA (-2.66%) lagged.
Later in the day, Japan's core CPI is expected to rise 1.8% year-on-year, and Qualitas will hold its FY26 briefing with statutory NPAT of A$41.7 million, fee-earning FUM of A$11.9 billion, and FY27 NPBT guidance of A$74–80 million. Reporting season continues with briefings from DGT, GQG, GYG, and ING at 10:00 AEST, followed by TPG's H1 webcast and Charter Hall's FY26 results.
The opening auction is set for 09:59 AEST, with continuous trading to follow. A break below the psychological 9,000 level on the ASX 200 would strengthen the risk-off signal, while energy versus bank relative strength will be a key tell. Gold miners' follow-through after Thursday's double-digit gains carries reversal risk.
