Australian shares are poised to open higher on Wednesday after a strong session on Wall Street, where artificial intelligence stocks led the market upward for a second consecutive day. Futures pointed to an ASX gain of around 16 points, or 0.2 per cent, at the open as of 4.53am AEST, following a flat close on Tuesday. The Australian dollar was buying US70.05 cents.

On Wall Street, the S&P 500 rose 0.9 per cent, the Dow Jones Industrial Average climbed 361 points or 0.7 per cent in mid-afternoon trade, and the Nasdaq composite surged 1.4 per cent, buoyed by renewed investor appetite for AI-linked companies.

AI Stocks Rebound After Last Week's Sell-Off

The rebound in artificial intelligence stocks has been the defining story of the past two sessions. After rocketing higher through much of the year on the back of surging investment in AI chips and data centres, the sector came under significant pressure in recent weeks. Investors grew concerned that valuations had run too far ahead of fundamentals, and questions lingered over whether AI investment would ultimately deliver the productivity and profit gains that had been anticipated.

Micron Technology was the standout performer, surging 12.7 per cent — adding to a 1.9 per cent gain from the day prior and clawing back much of the 13.3 per cent drop it suffered last week. Nvidia added a further 1.5 per cent. Together, the two companies were the biggest contributors to the S&P 500's advance.

For more on recent volatility in the sharemarket, see our earlier coverage of when the ASX was set to slip despite European stocks hitting record highs.

Oil Prices and Inflation Concerns Cloud the Outlook

Despite the upbeat mood on equity markets, a sharp rise in oil prices is adding fresh uncertainty. Brent crude topped US$90 per barrel, rising 2 per cent to US$91.01 and briefly approaching US$92 — a level not seen in more than five weeks. The surge represents a significant jump from below US$72 earlier this month, before the outbreak of hostilities between the United States and Iran.

Continued attacks between the two nations have kept energy markets on edge. The spike in oil prices is stoking fears of a renewed acceleration in inflation, which had been cooling faster than economists expected. Higher inflation could prompt the US Federal Reserve and other central banks to lift interest rates again — a move that typically weighs on economic growth and dampens asset prices. The yield on the benchmark 10-year US Treasury note edged up to 4.63 per cent, compared with just 3.97 per cent before the conflict with Iran began. The broader Economy of Israel and the wider Middle East region remain central to understanding the geopolitical pressures driving these energy market swings.

Rising fuel costs are also a concern for Australian consumers. Efforts to address petrol price gouging have gained renewed relevance in this environment.

Corporate Earnings Provide a Lift

A clutch of better-than-expected earnings results also helped support the market. 3M jumped 6.9 per cent after exceeding analyst forecasts for both profit and revenue and raising its full-year 2026 profit outlook. Toy giant Hasbro rallied 7.9 per cent after its Magic: The Gathering card game surpassed US$500 million in quarterly revenue for the first time, prompting an upgraded revenue forecast. General Motors climbed 4.8 per cent after its quarterly results beat expectations, with CEO Mary Barra noting that demand across North America remained solid.

Not all earnings were well received. Danaher slid 11.4 per cent despite topping profit and revenue estimates, with analysts flagging a weaker-than-expected outlook for an underlying revenue measure. Homebuilder D.R. Horton dipped 0.8 per cent even after beating forecasts, with its executive chairman pointing to lingering affordability challenges in the housing market.

Google Rolls Out New Gemini AI Models

Alphabet shares fell 0.9 per cent after Google unveiled three lighter, cheaper versions of its Gemini AI model. The new lineup includes Gemini 3.6 Flash, Gemini 3.5 Flash-Lite — both updated lightweight models suited to tasks that don't demand the most advanced AI capabilities — and Gemini 3.5 Flash Cyber, a new variant designed specifically for cybersecurity applications. However, the company offered no update on the timeline for its flagship Gemini Pro model, the launch of which has already been delayed by several weeks, disappointing some investors.