Index Update: Australian shares ended Tuesday at their lowest level in three months, with the S&P/ASX 200 falling 77.40 points, or 0.88%, to 8,672.50 and setting a 50-day low. Surging oil prices and multi-decade-high US bond yields increased weakened risk appetite. Materials led sector losses, sliding 2.21%, followed by energy and financials. Health care topped gains, rising 1.50%. The benchmark lost 2.78% over five sessions and remained virtually unchanged on a year-to-date basis through Tuesday’s close.

Macro update: Benchmark US 10-year Treasury yields moved above 5% on Monday, reaching their highest level since October 2023. The yield rose 3.51 basis points to 5.01% as markets considered prolonged elevated Federal Reserve rates following an oil-price jump and renewed Inflation concerns. Heavy Debt issuance, widening US deficits, rising government debt and resilient economic growth also supported the increase, potentially raising borrowing costs and making bonds increasingly more competitive with equities.

Top Market Movers: 4DMedical Limited (ASX:4DX) led gains, rising 8.720% or AUD 0.300 to AUD 3.740. Telix Pharmaceuticals Limited (ASX:TLX) advanced 8.629% or AUD 1.410 to AUD 17.750, while Life360 Inc. (ASX:360) added 5.015% or AUD 0.980 to AUD 20.520. Among decliners, Kingsgate Consolidated Limited (ASX:KCN) fell 6.570% or AUD 0.360 to AUD 5.120. Ora Banda Mining Ltd (ASX:OBM) dropped 5.264% or AUD 0.080 to AUD 1.440, while Silex Systems Limited (ASX:SLX) declined 5.055% or AUD 0.230 to AUD 4.320 during Tuesday’s session.

Commodity Update: The dollar edged higher near a two-week peak as rising oil prices pushed Treasury yields upward and strengthened expectations of a Federal Reserve rate hike this week. Gold gained 0.06% to 4354.20, while silver declined 0.10% to USD 64.06 and copper advanced 0.43% to USD 14,081.00. Brent Crude climbed 1.60% to USD 107.39 as renewed Houthi attacks on Saudi Arabia heightened Supply disruption concerns. Delays in talks over reopening the Strait of Hormuz further supported crude prices.

Our Stance: Tuesday’s sell-off left the S&P/ASX 200 at a three-month low, underscoring a cautious market backdrop as rising oil prices and US Treasury yields pressured risk appetite. The benchmark fell 0.88%, with materials leading losses, although health care offered some resilience. The US 10-year yield moving above 5% reinforced concerns about tighter financial conditions and competition from bonds. Market Breadth remained uneven: 4DMedical, Telix Pharmaceuticals and Life360 advanced, while Kingsgate Consolidated, Ora Banda Mining and Silex Systems declined. Firmer Brent crude and mixed metals added complexity, suggesting investors may remain selective until inflation and interest-rate uncertainty eases across Australian Equity markets.

On the technical front, the S&P/ASX 200 index declined in the latest trading session, with price action continuing to reflect near-term selling pressure. Despite the recent pullback, the index continues to hold above key support near 8,600, which remains crucial for maintaining the prevailing bullish bias. A sustained hold above this level could support a recovery towards recent highs, while a decisive break below 8,600 would weaken the technical structure and increase downside risk. On the upside, a decisive breakout above the recent swing high near 8,720.50 could reinforce bullish momentum and potentially pave the way for further gains towards the next target near 8,800.