What happened
The ASX 200 dropped 0.9% to 8,741.2 points last week as Brent crude oil surged above US$100 a barrel on Middle East supply disruption fears. Australian 10-year bond yields climbed above 5%, while global investors turned their focus to the US Federal Reserve interest rate decision due early Thursday morning AEST.
Why it matters here
Persistent oil prices above US$100 per barrel create a dual headwind for Australian shares by increasing corporate operational costs and stoking headline consumer inflation. This diminishes expectations of Reserve Bank of Australia monetary easing and lifts domestic bond yields, placing valuation pressure on long-duration equity assets.
What to watch
Monitor the US Federal Reserve's official policy announcement and economic projections early Thursday morning AEST for crucial guidance on the global interest rate outlook.
Source
hotcopper.com.au