The Australian sharemarket is expected to open higher on Wednesday, with futures pointing to a gain of 49 points, or 0.6%, following gains on Wall Street and stronger commodity prices.

Investors will also be watching quarterly updates from Rio Tinto Ltd (LSE:RIO, ASX:RIO, OTC:RTNTF), Evolution Mining Ltd (ASX:EVN), Ampol Ltd and Auckland International Airport Ltd.

ASX finishes flat after recovering early losses

The S&P/ASX 200 finished Tuesday exactly where it started, closing flat at 8,808.5 points after recovering from a midday fall of as much as 43 points, or 0.5%.

Seven of the 11 market sectors ended higher, with energy stocks helping the benchmark erase its early losses as oil prices continued to rise amid escalating tensions between the United States and Iran over the Strait of Hormuz.

US President Donald Trump said he would reinstate a blockade preventing tankers carrying Iranian oil from using the strait and proposed a 20% levy on cargo passing through the waterway to reimburse the US for providing protection.

The Strait of Hormuz is a critical route for crude oil shipments from the Persian Gulf, and disruptions have raised concerns about global energy supplies and inflation.

Woodside Energy Group Ltd (ASX:WDS, LSE:WDS, OTC:WOPEF) gained 3.3%, Santos Ltd (ASX:STO) rose 1.2%, Ampol advanced 2.4% and Viva Energy Group Ltd added 1.9%.

Miners mixed as banks lose ground

Mining stocks delivered a mixed performance, with BHP Group Ltd (LSE:BHP, ASX:BHP) gaining 0.9% and Fortescue Ltd (ASX:FMG) rising 1.1%, while Rio Tinto Ltd slipped 0.4%.

Gold stocks initially fell after bullion dropped below US$4,000 an ounce following comments from US Federal Reserve governor Christopher Waller that policymakers may need to raise interest rates to contain inflation.

Gold recovered later in the session, helping Evolution Mining finish 3.1% higher, while Northern Star Resources Ltd (ASX:NST) limited its decline to 0.2%.

Financial stocks weighed on the index. ANZ Group Holdings Ltd fell 1.4%, National Australia Bank Ltd declined 1.2%, while Westpac Banking Corp and Commonwealth Bank of Australia (ASX:CBA) each lost 0.9%.

Technology stocks were mixed following a weak session for the sector. WiseTech Global Ltd jumped 4% and Xero Ltd gained 1.2%, while TechnologyOne Ltd fell 1.6% and NEXTDC (ASX:NXT) Ltd dropped 3.6%.

Wall Street rises after softer inflation reading

The S&P 500 and Nasdaq advanced on Tuesday after softer-than-expected US inflation data reduced expectations of an imminent interest rate increase.

The US consumer price index rose 3.5% in June from a year earlier, below market forecasts for a 3.8% increase.

Traders reduced the implied probability of a quarter-point rate increase at the Federal Reserve’s next meeting to about 17%, down from 40% before the data was released.

Technology stocks led the gains, with the sector rising 1.3%, although IBM shares plunged 25% after the software and consulting group forecast preliminary second-quarter revenue below expectations.

Bank earnings were also in focus. Goldman Sachs gained 9% after exceeding quarterly profit forecasts as dealmaking activity improved, while JPMorgan Chase rose 2.5% and Bank of America added almost 2%.

Wells Fargo fell 2.6% and Citigroup declined 5.3% despite both companies reporting stronger-than-expected results.

The Dow Jones Industrial Average finished flat, the S&P 500 gained 0.4% and the Nasdaq Composite added 0.9%.

US government bond yields declined following the inflation data. The 10-year Treasury yield fell 2 basis points to 4.59%, while the two-year yield dropped 7 basis points to 4.19%.

European markets edge higher

European sharemarkets finished modestly higher as the softer US inflation reading reduced expectations of further Federal Reserve tightening, although Middle East tensions capped gains.

The pan-European FTSEurofirst 300 index rose 0.1%, while the UK’s FTSE 100 advanced 0.3%.

Basic materials stocks climbed 2.4% as metal prices benefited from a weaker US dollar, while the oil and gas sector gained 1.3%.

BP PLC (LSE:BP.) rose 2.3% after the energy group said stronger oil and gas prices were expected to support its second-quarter earnings.

Travel and leisure stocks declined 1.3%.

Software groups SAP and Capgemini fell 2.8% and 1.6%, respectively, after IBM warned that rising artificial intelligence investment was putting pressure on traditional software budgets.

Australian dollar strengthens

Major currencies advanced against the US dollar following the inflation report.

• The euro gained 0.3% to US$1.1419.
• The Japanese yen strengthened 0.1% to 162.22 per US dollar.
• The Australian dollar jumped 0.8% to US69.69 cents.

Oil, gold and base metals rise

Oil prices reached a one-month high after the US reimposed a naval blockade on Iran.

• Brent crude futures settled 1.7% higher at US$84.73 a barrel.

Base metals also advanced, supported by the weaker US dollar and concerns about global supply disruptions.

• Copper futures climbed 1.6% to a three-week high amid signs of stronger Chinese demand, lower inventories and heightened Middle East supply risks.
• Aluminium gained 0.6%.
• Gold futures rose 1.6% to settle at US$4,070 an ounce as investors scaled back expectations of aggressive Federal Reserve interest rate increases.
• Iron ore futures gained 0.6% to US$98.92 a tonne after data showed Chinese iron ore imports reached a six-month high in June.

Looking ahead

Australian investors will focus on quarterly updates from Rio Tinto, Evolution Mining, Ampol and Auckland International Airport.

In the United States, Morgan Stanley (NYSE:MS), BlackRock, Johnson & Johnson (NYSE:JNJ), Bank of New York Mellon and United Airlines are due to report quarterly earnings.

The US producer price index will also be released, providing investors with another reading on inflationary pressures.