ASX Holds Firm Despite War-Driven Oil Surge and Rising Inflation Risks

Preview: Gold, EUR/USD and Nasdaq100

The Australian market opened firmer mid-week as strength in materials helped offset renewed inflation concerns triggered by the escalating Middle East conflict. Oil’s surge toward $87 a barrel is once again forcing investors to reassess the global inflation outlook, particularly as energy costs feed back into transport and supply chains.

At the same time, the macro backdrop in Australia is tightening. The Australian dollar has pushed above US$0.717, its strongest level in more than three years, while bond yields climbed following hawkish remarks from RBA Deputy Governor Andrew Hauser, who warned that failing to anchor inflation expectations could create a “toxic” high-inflation environment.

Markets are now rapidly repricing policy risk. Money markets have lifted the probability of a March rate hike to roughly 60%, reinforcing the view that the RBA may need to move sooner rather than later if energy-driven inflation pressures intensify.

Wall Street: Choppy Trading as Geopolitics Drives Sentiment

US equities traded sideways on Tuesday as investors balanced hopes for de-escalation against signs that the conflict could still widen, despite comments from President Trump suggesting the conflict could end “very soon.” The S&P 500 slipped 0.2%, while the Dow and Nasdaq ended largely unchanged as markets struggled to hold early gains.

Initial optimism followed comments suggesting that military operations could conclude soon, but sentiment quickly cooled after the White House clarified that naval escorts for oil tankers in the Strait of Hormuz have not yet begun. The result is a market once again trading headlines rather than fundamentals, where each geopolitical update quickly reshapes the risk premium embedded across global assets.

Commodities: Oil Volatility Revives the Inflation Debate

Energy markets remain the epicentre of the geopolitical shock. WTI crude briefly surged above $100 over the weekend before retreating toward $80. Iranian officials have rejected suggestions that the conflict is nearing completion and warned they would continue to disrupt regional exports until US and Israeli strikes cease. With roughly 20% of global crude flows passing through the Strait of Hormuz, even the threat of disruption has been enough to inject a significant war premium back into oil markets.

Gold: Consolidates Within Rising Channel as Safe-Haven Demand Holds

Gold has regained upward momentum after a brief retreat as investors hedge against geopolitical escalation and macro uncertainty.

From a technical standpoint, gold remains within a rising channel, consolidating after the sharp rally that pushed prices above $5,400 earlier this year. Immediate resistance sits near $5,326, while the first layer of support lies around $5,067, followed by the 50-day SMA near $4,913. Momentum indicators have cooled but the broader bullish structure remains intact as long as the channel support holds.

EUR/USD Tests Key Support as Dollar Strength Reasserts Itself

The euro has slipped roughly 4% from its recent peak, breaking below both its short-term and long-term trend channel as dollar strength reasserts itself amid rising geopolitical risk. Price is now testing support around 1.151, which marked the previous peak in April 2025. A sustained break below the current support zone could open the door for a deeper correction toward 1.146, the lowest level since August.

Nasdaq 100 Trades in Descending Range, Hovering Near 200-Day SMA

The Nasdaq 100 continues to trade within a descending consolidation pattern, reflecting investors’ hesitation to rebuild confidence following the recent wave of AI-related concerns. Immediate resistance sits near 25,285 (50-day SMA), while support rests around 24,390, followed by the 200-day moving average. A decisive breakout above the descending trendline would signal renewed upside momentum for the technology sector, while failure to hold support could extend the current consolidation phase toward the 23,107–24,028 support zone.

Disclaimer: The material provided here has not been prepared in accordance with legal requirements designed to promote the independence of investment research and as such is considered to be a marketing communication. Whilst it is not subject to any prohibition on dealing ahead of the dissemination of investment research we will not seek to take any advantage before providing it to our client. No representation or warranty is given as to the accuracy or completeness of this information and therefore it shouldn’t be relied upon as such. Any research provided does not have regard to specific financial situations, needs or investment objectives. Vantage accepts no responsibility for any use that may be made of these comments and for any consequences that result. Consequently, any person acting on it does so entirely at their own risk. We advise any readers of this material to seek professional advice where necessary. Without the approval of Vantage, reproduction or redistribution of this information isn’t permitted.