Weekly Market Wrap: Oil broke US$100 — but Nvidia and copper are reshaping the ASX trade

The ASX 200 suffered its worst week since March as oil’s surge above US$100 a barrel pushed investors out of banks, retailers, technology stocks and gold miners.

The index fell 2.9% over the five trading days to Friday, closing near 8,741. The selling accelerated late in the week as Brent crude briefly reached US$109.97 a barrel, its highest level in four months, and US inflation data strengthened the case for another Federal Reserve rate hike.

This was not a simple commodity rally. Energy shares and copper-linked miners found buyers earlier in the week, but neither was enough to offset the pressure elsewhere. BHP fell 4.1% on Friday as miners led the final sell-off, while the ASX’s major banks and rate-sensitive sectors also weakened.

The week also delivered a more constructive Australian technology story. Nvidia announced plans to support up to 2 gigawatts of new AI-related data-centre capacity in Australia by 2027 through partnerships including NEXTDC, CDC, AirTrunk and Firmus. That puts local infrastructure, power supply and data-centre stocks closer to the centre of the global AI build-out.

For Australian traders, the market is now balancing three live themes: an escalating oil shock, renewed interest-rate risk and large-scale investment in the infrastructure behind AI.

SELL BUY

Brent’s move above US$100 was the week’s dominant market event. Iranian attacks on vessels near the Strait of Hormuz and wider disruption around the Red Sea pushed the market from a manageable geopolitical premium to a more serious supply concern.

On Friday, Brent briefly touched US$109.97 before retreating. It still ended the week more than 8% higher, while West Texas Intermediate also moved above US$100.

Higher crude initially supported Australian energy shares. Woodside and Santos rose during the week as investors priced in the potential benefit of higher realised oil and gas prices.

But the market quickly focused on the cost of a sustained energy shock.

Higher petrol, diesel and freight costs can feed through to retailers, transport companies, miners, farmers and households. Singapore gasoil, a key benchmark for Australian diesel prices, has climbed sharply as refinery disruptions in the Persian Gulf and Russia tighten the fuel market.

That is why oil’s rise became a broad ASX problem rather than a clean energy-sector opportunity. Financials, consumer discretionary, healthcare and technology shares all came under pressure, and the ASX 200 ended four consecutive sessions lower.

The situation became more serious again over the weekend, with an attack on Saudi Arabia’s east-west pipeline threatening a route that had helped bypass the closure of the Strait of Hormuz. If the outage persists, it could remove up to 4% of global oil supply.

SELL BUY

Copper hit a record high during the week, briefly giving BHP, Rio Tinto and Fortescue a powerful tailwind.

That move matters because copper has become central to the investment case for BHP and Rio. Electrification, grid investment, renewable generation, electric vehicles and data centres all require significant amounts of copper. A stronger copper price signals that investors remain focused on a long-term shortage of supply, even as oil threatens near-term global growth.

The miners rallied strongly earlier in the week, but that strength did not last. BHP, Rio and Fortescue were swept into Friday’s broader risk-off move as oil and bond yields rose.

The reversal makes the sector worth watching closely. Copper’s record level supports the longer-term demand story, while a prolonged oil spike creates immediate risks for China-linked growth and global industrial activity.

For traders, BHP and Rio have become a more complex read than the old iron-ore trade. Their shares now sit between three competing forces: iron-ore demand, copper’s structural upside and the market’s reaction to higher energy costs.

SELL BUY

The strongest positive Australian share-market development of the week came from Nvidia’s planned expansion of local AI-computing capacity.

Nvidia is partnering with Firmus, CDC, NEXTDC and AirTrunk to add up to 2GW of AI-related data-centre capacity by 2027. Australia currently has around 1.6GW of installed data-centre capacity, so the proposed projects could more than double the country’s existing load.

The announcement puts NEXTDC and the wider data-centre ecosystem in focus. It also creates potential demand for electricity generation, grid connections, cooling systems, construction and specialist equipment.

The constraint is power. AI data centres require huge and reliable electricity supply, while Australia’s grid is already managing the transition away from coal generation. That makes energy availability as important as chip access.

There is also a growing hardware bottleneck. Chinese AI-chip makers raised prices by as much as 20% to 50% this week because of shortages of high-bandwidth memory, a critical component in advanced AI systems.

The AI trade is therefore becoming more selective. Companies with access to data-centre capacity, power, chips and memory may be better placed to benefit from demand. Companies funding expensive projects without secured infrastructure face a tougher path.

SELL BUY

Gold usually attracts buyers when geopolitical risk rises. This week, the metal and Australian gold miners moved in the opposite direction.

Spot gold fell for a third straight week as oil’s surge lifted inflation expectations and the US dollar strengthened. Northern Star, Evolution, Westgold, Resolute and other local gold names sold off sharply during the week.

The explanation is the growing prospect of higher interest rates. US headline CPI rose 0.4% in August, matching expectations, but core CPI rose 0.3% against forecasts for 0.2%. Annual core inflation eased to 2.4% from 2.5%, though the stronger monthly reading kept markets focused on sticky price pressure. Markets are now pricing roughly an 85% chance of a quarter-point Fed rate increase next week, up sharply from before the CPI release. Higher rates lift the opportunity cost of holding non-yielding gold, particularly when Treasury yields and the US dollar are rising.

Gold still has a potential safe-haven role if the conflict widens further. For now, higher oil and higher-rate expectations are proving the stronger forces.

Brent crude: Can the Saudi pipeline outage push oil higher again?

Brent has already crossed US$100, but the market now faces a more serious supply question. Saudi Arabia’s east-west pipeline has been a key alternative route while Hormuz traffic remains restricted.

A prolonged outage, additional tanker attacks or further disruption to regional refineries could tighten supply quickly. Diplomatic progress around safe shipping routes could remove part of the risk premium just as fast.

ASX 200: Can energy and copper stop the slide?

The ASX enters the new week after a 2.9% decline, with energy and mining shares still the clearest potential supports. The index will need more than a commodity rally, however, if banks, retailers, healthcare and technology stocks remain under pressure.

Stabilising oil prices and easing Treasury yields could help the index recover. Another rise in crude, or a hawkish Fed decision, could extend the broad sell-off.

Australian AI infrastructure: Will Nvidia’s partners turn plans into contracts?

Nvidia’s expansion plan has created a tangible local AI-infrastructure theme. NEXTDC, power suppliers, grid businesses and data-centre contractors will all be watched for project updates and customer announcements.

The key question is whether capacity, power connections and financing can keep up with the proposed scale of investment. That will determine which Australian companies capture the economic benefit of the AI build-out.

The coming week will test whether markets can absorb an oil shock while central banks remain focused on inflation. Energy and copper have created clear pockets of strength, but the Fed decision and Middle East developments will determine whether that strength can spread beyond a narrow group of commodity-linked stocks.

This week showed why the ASX cannot be viewed as a single trade. Rising oil supported energy companies, copper improved the long-term case for major miners, Nvidia put Australian data-centre infrastructure in focus, and higher yields pressured the broader market.

Mitrade gives traders access to global indices, commodities, forex and selected shares from one platform. CFDs can be used to take a long or short position depending on how the next catalyst develops, with stop-loss and take-profit orders available to help manage risk.

Start trading global markets in three simple steps