ASX set to fall as oil plunges and Nvidia drops 5%

Australian equities are poised to open lower on Thursday, 28 July 2026, after a double‑whammy of a sharp slip in crude oil and a fresh sell‑off in US tech. Oil prices have dived roughly 9 per cent in recent sessions, while Nvidia shed 5 per cent, stripping it of the world’s most‑valuable‑company badge in favour of Apple.

ASX 200 futures slipped 20 points, or 0.2 per cent, to 8 821 ahead of the open according to the Australian Financial Review. The move mirrors a broader risk‑off mood that has gripped global markets after the latest escalation in the US‑Iran conflict and the resurgence of middle‑East supply‑chain disruptions.

In New York, the S&P 500 managed a marginal 0.02 per cent gain, but the tech‑heavy Nasdaq was dragged down by a 5 per cent tumble in Nvidia. Apple rose 1.2 per cent, nudging its market capitalisation to $4.95 trillion as noted by the Afr. The semiconductor index, after an early slump, trimmed its losses to 2.2 per cent by the close.

“While some of the consolidation is healthy, in addition to the technical vulnerabilities we highlighted last week, we now see more fundamental risk factors reaffirming that the market narrative needs a new catalyst for stocks to break out to the upside,” said Morgan Stanley analyst Lisa Shalett in a note. She flagged three metrics she is watching: real rates on long bonds, reactions to exceptional earnings, and US‑Iran hostilities. Shalett added that “active managers should exploit subsurface volatility, while passive investors should stay patient, as asymmetric downside risks may persist a while longer.”

Across the Pacific, the Sharecafe weekly update paints a broader picture. The analyst‑driven commentary underscores that the heightened war risk has revived oil’s rally, with Brent climbing back above $100 per barrel after a dip to June lows. The surge has already pushed Australian petrol prices from $1.53 per litre at the end of June to $1.84 per litre, with further hikes expected once the temporary fuel‑tax cut expires in early August.

And the ripple effects are already visible on the ASX. Tech, property and mining stocks led the falls, while energy and financial shares offered some cushion. The market’s exposure to US‑based chip makers like Nvidia has become a clear vulnerability, especially as investors chew over the sustainability of AI‑driven earnings. Sharecafe’s chief economist Dr Shane Oliver notes that the “Magnificent Seven” group of tech stocks slipped 5 per cent for the week, despite strong earnings reports.

The Strait of Hormuz has been effectively sealed, and Houthis have targeted Saudi shipping in the Red Sea, threatening up to 7 million barrels per day that were previously diverted through the East‑West pipeline. If the Bab el‑Mandeb chute is fully blocked, oil would have to detour around Africa, adding cost and time.

In Australia, policymakers are already on the agenda. Reserve Bank Governor Michele Bullock is slated to give a speech at the Anika Foundation Fundraising Lunch at 1.05pm (AEST) in Sydney, a session many market participants will watch for hints on the central bank’s next move. The Sharecafe note argues that the RBA is likely to raise rates again in August, citing the rebound in oil‑price‑driven inflation and a “bit tight” labour market.

The impending data releases add another layer of uncertainty. June inflation figures are due next week, and any trim‑mean reading above 3.7 per cent yoy could cement the case for an August hike, while a reading nearer 3.5 per cent yoy might give the RBA pause. In the US, the Fed is expected to hold rates steady on Wednesday, but hawkish commentary could keep market nerves high.

And yet, not all sectors are equally bruised. Australian energy and financial stocks have helped buffer the broader market, delivering modest gains that offset some of the tech‑driven weakness. The domestic PMIs for July rose 2.2 points to 52.6, indicating “okay” expansion despite the oil shock. Input price pressures fell, but output price pressures stayed elevated, signalling persistent inflationary risk.

What does this mean for the average investor? The convergence of a volatile oil market, geopolitical escalation, and a technology correction creates a “subsurface volatility” environment that Shalett describes as a potential opportunity for active managers. For passive investors, the advice is to stay patient and brace for asymmetric downside risk.

What to watch next

• End‑July 2026 – Corporate earnings season peaks; watch for AI spending outlooks from companies like Alphabet and Nvidia.

In the short term, the ASX’s opening dip appears likely to mirror the twin pressures of oil‑price turbulence and tech‑stock weakness. A sustained rally in oil could keep inflation worries alive, feeding into the RBA’s rate‑setting calculus, while a recovery in AI‑related earnings might gradually restore confidence in the sector that has been the biggest drag.

And as the week unfolds, investors will be scanning not just the price charts but also the policy speeches and geopolitical headlines that could tip the balance either way.