Global risk sentiment recovered modestly overnight as Wall Street posted a tepid rebound — S&P 500 +0.21% to 7,707.98 and the Dow +0.22% to 53,463.05 — even as Middle East tensions tied to Iran and Strait of Hormuz risks kept energy markets on edge and Brent crude firm above $91/bbl. The US Treasury's signal of increased purchases of longer-dated bonds provided some relief on the long end, with 30-year yields easing 3bp to 5.28%, though the 2-year held at 4.19%, keeping the curve steeply inverted and higher-for-longer policy expectations intact. FOMC Meeting Minutes released at 04:00 AEST will be closely parsed for any shift in the Fed's tolerance for sticky inflation — core PCE remains around 3.3% y/y — against a backdrop of slowing global growth, with the World Bank revising 2026 global GDP down to approximately 2.5%. The VIX fell sharply, down 6.00% to 14.89, suggesting near-term fear has eased in US markets even as structural risks persist.
For Asia-Pacific markets opening today, the picture is more cautious: the Nikkei dropped 2.54% to 67,460.73, with the Nikkei VIX jumping 3.53% to 30.51, signalling that Japanese investors are pricing considerably more volatility than their US counterparts. The KOSPI fell 1.55% and the SGX slid 1.16%, reflecting broader regional unease around chip and technology weakness extending from the US session. The AUD/USD gained 0.65% to 0.7128, supported by firmer commodity prices — gold surging 4.84% to $4,577.50/oz and copper up 0.42% — which provides a tailwind for ASX resources names but may complicate the export earnings picture for some. The ASX 200 closed marginally lower at 9,070.0 (down 0.04%) in the prior session, and today's domestic Employment Change data at 11:30 AEST — forecast at just 11.7K versus a prior 76.3K — will be the critical local catalyst for rate expectations and AUD direction.