US sharemarkets ended largely flat on Monday after rebounding from sharp early losses triggered by joint US-Israeli strikes on Iran over the weekend. The S&P 500 edged up 0.04% to close at 6,881.62 after falling as much as 1.2% earlier in the session. The Nasdaq Composite gained 0.36% to 22,748.86, reversing a 1.6% intraday decline, while the Dow Jones Industrial Average slipped 73 points, or 0.15%, to 48,904.78, having been down nearly 600 points at its lows.
Technology stocks led the recovery, with Nvidia rising nearly 3% and Microsoft adding more than 1% as investors rotated back into large-cap names viewed as more resilient during periods of geopolitical stress. Defence stocks also advanced, with Northrop Grumman up 6% and Lockheed Martin higher, while energy shares gained alongside oil prices.
Oil surge and geopolitical risks drive volatility
Oil prices spiked amid fears that the conflict could disrupt supplies, with US crude up as much as 12% during the session before easing. Brent crude remained sharply higher after Iranian officials suggested the Strait of Hormuz, a key global shipping route, had been closed. Gold also rose, reflecting demand for defensive assets.
While markets initially reacted sharply, equities trimmed losses as oil retreated from intraday highs and investors weighed the historical tendency for markets to recover following geopolitical shocks.
Australian market outlook
Australian shares are set to open lower on Tuesday, reflecting the heightened geopolitical backdrop. ASX 200 futures were down 20 points, or 0.22%, to 9,137.
Locally, attention turns to the Australian Financial Review Business Summit, where Reserve Bank governor Michele Bullock is scheduled to deliver a keynote address. January building approvals are due at 11.30am, while Life360 is expected to report quarterly results.
Globally, investors will monitor developments in the Middle East, UK budget updates, China’s policy announcements later this week, Australia’s fourth-quarter GDP release on Thursday, and US February employment data due early Saturday AEDT.