The Australian sharemarket hit a four-month low after fresh strikes on Middle Eastern energy infrastructure sent oil above $US110 a barrel, while strong labour market date kept a May interest rate rise on the table.
The S&P/ASX 200 Index dived 137.60 points, or by 1.6 per cent to 8503 at 12.13pm (AEDT), with three of the 11 sectors higher. A close at this level would be the lowest since late November.
Oil surged overnight after Iran and Israel traded strikes on key energy facilities in the Middle East, further roiling markets as the conflict stretches into three weeks. Brent Crude rose 3.7 per cent to $US111.53 in Asian trading, adding to a strong overnight surge.
Rate fears
In Australia, the unemployment rate climbed more than expected to 4.3 per cent in February as the participation rate climbed. The number of jobs climbed 48,900 jobs instead of the 20,000 expected.
“Today’s jobs data reinforces the tightening bias [of the Reserve Bank], suggesting policy will need to stay restrictive for longer than markets may be hoping,” Global X senior product and investment strategist Marc Jocum said.
Bond markets are now full priced for two more rate increases this year which would take the cash rate to 4.6 per cent, the highest in 15 years.
On the ASX, the energy sector jumped by nearly 3 per cent. Santos rose 3.2 per cent, Ampol 4.4 per cent, and Woodside Energy 5.7 per cent – the company also appointed former Anglo American chief executive Mark Cutifani as a director.
Direct attacks on Qatar’s largest gasfield also boosted the prospects of the coal miners. Whitehaven Coal gained 5.1 per cent, Yancoal 6.7 per cent and New Hope 3.1 per cent.
Materials were the weakest on the bourse as gold plunged overnight to around $US4830 an ounce and Federal Reserve chairman Jerome Powell warned higher energy prices would push up overall inflation. Northern Star tumbled 9.2 per cent, Evolution Mining 8.8 per cent and Newmont fell 5.9 per cent.
While the prospect of higher for longer interest rates weighed on rate-sensitive sectors of tech and real estate. WiseTech Global fell by 4.5 per cent, Xero by 2.4 per cent and Goodman Group shed 3.8 per cent.
Stocks in focus
In company news, Lynas Rare Earths lost 2 per cent despite reporting the first production of samarium oxide at its Malaysian processing facility. It expands the group’s heavy rare earth product range.
Boss Energy dropped 5.5 per cent even as it increased the uranium resource at its Gould’s Dam and Jason’s satellite deposits in South Australia.
And Orora retreated 2.7 per cent as it appointed Paul Victor as chief financial officer, effective November 4, replacing long-serving finance chief Shaun Hughes.