ASX Set for Lower Open as Wall Street Drops Sharply; Oil Prices Surge

Australian investors are bracing for a subdued start to the trading week, as indicated by futures markets pointing to a decline in the benchmark ASX 200 index. This cautious sentiment appears to be influenced by a significant downturn on Wall Street, which saw major US indexes shed gains and retreat from record highs in their latest sessions. The global economic mood is clearly one of risk aversion, prompting a sell-off in equities.

Adding to the market's unease is the escalating price of oil. Brent Crude has surpassed the $US109 per barrel mark, driven by ongoing geopolitical tensions and uncertainty surrounding the conflict in Iran. This rise in energy costs has broad implications for inflation and corporate profitability, both domestically and internationally, making it a key factor for market participants to monitor closely.

Domestically, attention will be focused on Australia's major banks, which have experienced notable share price declines in May. Following a consequential federal budget and disappointing quarterly results, particularly from Commonwealth Bank (CBA), investors are scrutinizing the banking sector. While most major banks have seen losses this month, they generally remain above their mid-2025 levels, suggesting that the current downturn might be a correction rather than a systemic crisis. The performance of these financial giants will be crucial in shaping the ASX's trajectory this week.