ASX 200 Set to Drop 65 Points Monday as Wall Street Tumbles, Oil Hits $112

The ASX 200 is set to open 65 points lower on Monday—down 0.75%—after Wall Street took another beating on Friday night. Futures trading suggests the benchmark index will drop below 8,400 points at the open.

The Dow Jones fell 1.7%, losing more than 650 points. The S&P 500 dropped 1.7%, erasing gains from earlier in the week. The Nasdaq tumbled 2.15% as technology stocks bore the brunt of the selling.

The catalyst: fresh escalation in the Middle East, with reports of Houthi forces preparing to enter the conflict directly. Markets had been pricing in a peace deal. That optimism is now gone.

Update: ASX Down 1.3% at Midday

By 1:30pm AEDT, the ASX 200 was trading 1.3% lower—worse than futures had indicated. Brent crude surged to US$116 a barrel during the session as Houthi forces confirmed their involvement in the conflict.

The banks led losses. Commonwealth Bank fell 2.1%, Westpac dropped 1.9%, and ANZ lost 1.7%. Tech stocks weren't spared—Xero fell 2.8% and WiseTech dropped 2.4%.

Oil Surges Past $112

Energy stocks should buck the trend for the rest of the week. WTI crude jumped 5.45% overnight to US$99.64 a barrel. Brent crude rose 4.2% to US$112.57—the highest level since the Hormuz blockade began.

Santos and Woodside shareholders will take some comfort. Santos rose 1.2% in early trade, while Woodside gained 0.9%. Beach Energy added 1.5%.

The driver is straightforward: another escalation in the Middle East conflict, just when markets were pricing in a diplomatic resolution. Oil traders are now positioned for a prolonged disruption.

Gold Hits $4,524

Gold futures were up 2.6% to US$4,524.3 an ounce overnight. The precious metal had sold off sharply last week, but traders appear to believe it was oversold. Safe-haven demand is back.

Newmont and Northern Star should see early buying interest. Evolution Mining and Regis Resources are also worth watching. Gold equities typically lag the metal by a day or two before catching up.

AMP Announces $150M Buyback

AMP revealed an on-market share buyback of up to $150 million on Friday afternoon. The wealth manager has been returning capital to shareholders as it reshapes its business following years of scandals and restructuring.

We remain committed to returning surplus capital to shareholders in the absence of a compelling alternative, and prioritising organic growth in our wealth businesses.

— Alexis George, AMP CEO

AMP shares have gained 23% over the past twelve months as the turnaround takes hold. The buyback will be funded from existing cash reserves.

Bell Potter: Buy Catapult

Bell Potter retained its buy rating on Catapult Sports (ASX: CAT) with a price target of $4.75—implying nearly 40% upside from Friday's close. The broker called it their 'preferred mid cap exposure in the tech sector' ahead of a strategy session next week.

Catapult provides athlete monitoring technology to professional sports teams globally. Revenue growth has accelerated as more clubs adopt its wearable sensors.

The Bottom Line

A tough start to the week looks certain. The combination of Middle East escalation, elevated oil prices, and Wall Street weakness creates a challenging backdrop.

But energy and gold names should provide some shelter. Investors looking for defensive positioning may find opportunities in the resources sector as oil remains elevated and safe-haven demand returns to precious metals.