ASX slumps as miners, banks fall; Oil prices jump

The Australian sharemarket has opened sharply lower after Wall Street fell as another round of US military strikes on Iran sent oil prices higher, stoking worries about stubbornly high inflation. A bond market sell-off deepened, putting more pressure on stocks.

The S&P/ASX 200 was down 103.1 points, or 1.1 per cent, in early trade. The ASX lost 0.1 per cent on Tuesday. The Australian dollar is weaker at US71.47¢.

Overnight, the S&P 500 index fell 0.7 per cent. The Dow Jones Industrial Average dropped 0.8 per cent, and the Nasdaq composite slid 1 per cent. The major indexes have lost ground three days in a row.

The weak start to September follows a shaky but mostly positive month for Wall Street. Every major index notched monthly gains in August. The same worries continue to hang over Wall Street, though, including anxiety over rising prices, government debt, and the impact of global conflicts on the US and the global economy.

Technology stocks were among the heaviest weights on the market. Nvidia fell 1.5 per cent, Amazon dropped 1.9 per cent and Advanced Micro Devices gave up 2.4 per cent. Their big market values tend to give them more influence over the broader market’s direction and their growth amid the artificial-intelligence boom has been heavily reliant on borrowing, which becomes more expensive as interest rates rise.

Much of the continued pressure being felt by Wall Street is coming from an ongoing sell-off in US government bonds. The yield on the 10-year Treasury, which tends to impact mortgage rates, rose to 4.79 per cent from 4.75 per cent late Monday. It was as low as 4.20 per cent at the beginning of 2026.

The yield on the 2-year Treasury, which closely tracks expectations for Federal Reserve moves on interest rates, rose to 4.39 per cent from 4.34 per cent late Monday. That’s up significantly from about 3.50 per cent at the beginning of 2026.

Bond yields, which have an inverse relationship to prices, rise as bond prices fall. Rising yields signal that investors are demanding a higher return from Treasurys because they are becoming riskier. Growing government debt is highlighting that risk.

The US debt surpassed $US40 trillion ($US56 trillion) two weeks ago, a shocking milestone as defence costs and interest on the burgeoning deficit make up an enormous share of federal spending. The bond sell-off is global, with other nations facing the same economic pressures.

Higher yields on bonds signal higher borrowing costs on mortgages and a wide range of other loans. Higher borrowing costs tend to weigh down investments, including stocks, while making it more difficult for businesses to expand.

Oil prices have been behind much of the pressure on inflation, bond yields and the broader stock market. The price of Brent crude, the international standard, rose 4.6 per cent to settle at $US94.65.