Risk sentiment improved sharply overnight as oil's steep retreat — Brent crude falling 7.70% to $95.87/bbl and WTI dropping 8.35% to $91.92/bbl on signs of improving supply flows through the Strait of Hormuz and diplomatic overtures amid the ongoing US-Iran conflict — eased inflation fears and allowed Treasury yields to pull back, with the US 10-year dipping toward the 5.01% level after recent highs. Central banks remain a pivotal force: the Fed's recent 25bp hike (its first in three years) has markets pricing roughly 50% odds of another move next month, the ECB and BoE are both navigating data-dependent holds, and RBA Governor Bullock's scheduled speech today at 13:10 AEST carries high-impact potential given the Bank's hawkish signalling ahead of its late-September meeting. An upcoming Trump-Xi summit — with tariffs, critical minerals, and AI squarely on the agenda — added a constructive geopolitical overlay that supported emerging market and commodity-linked sentiment. The VIX edging up modestly to 14.87 despite the equity rally suggests some residual caution, but the ASX VIX falling 5.39% to 11.94 points to a calmer local open.
For Asia-Pacific markets, the cross-asset signal is broadly supportive: a surging Nasdaq (+2.26% to a new all-time high at 27,122.09), AMD reaching a $1 trillion market cap, and the Accenture-Anthropic $2B AI partnership all confirm that the AI infrastructure buildout remains the dominant risk-on driver. Copper's 2.71% gain to $6.794/lb on AI and electrification demand is a direct positive for ASX-listed diversified miners including BHP and Rio Tinto, while the sharp oil pullback creates a headwind for energy names such as Woodside. The AUD held steady at $0.7124, providing limited FX drag, and positive weekend talks between US Treasury Secretary Bessent and Chinese Vice Premier He Lifeng on trade and AI safety add a constructive China backdrop for iron ore and base metals exposure heading into today's session.