The Australian sharemarket fell on Friday as the escalating conflict in the Middle East raised the prospect of sustained disruptions to energy markets and oil prices, with implications for inflation and global commerce.
The S&P/ASX 200 Index was down 113.6 points, or 1.3 per cent, to 8826.7 at 2.02pm AEDT, taking losses for the week to around 4.1 per cent – wiping out February’s gain of 3.7 per cent.
This week’s decline would mark the benchmark’s worst week since a 4.2 per cent drop in May 2022, when the Reserve Bank of Australia delivered a shock rate rise. Bond markets also moved to price in more than two RBA rate rises by year’s end after a jump in yields.
Capital.com senior market analyst Kyle Rodda said markets have started to price in a degree of price shock from oil, which has diminished hopes for further US rate cuts and flipped the swaps curve in the Eurozone.
“The risk of an ongoing and intensifying supply shock that heavily disrupts energy markets and leads to higher inflation and weaker economic growth has risen,” Rodda said.
Oil dropped in Asian trade by 1.4 per cent to $US84.19 a barrel after the Trump administration weighed a range of options to address the spike in oil and petrol prices amid the war in Iran. On the ASX, Woodside Energy rose 0.8 per cent, Santos by 1 per cent and Viva Energy by 2.7 per cent as UBS reiterated its buy rating.
Spot gold gained 0.8 per cent to $US5124.70 as it tracks its first loss in more than a week as investors rotated into the US dollar. Catalyst Metals fell 10 per cent, Ora Banda Mining 7.2 per cent and Newmont by 2.2 per cent.
Iron ore miners also weighed after China’s state-backed iron ore buyer summoned traders and urged them to stop purchasing new BHP cargoes for resale into the country after finding they had breached existing purchase restrictions. BHP dropped 4.5 per cent, Rio Tinto 4.5 per cent and Fortescue 1.1 per cent.
Investors continued to buy tech stocks with WiseTech Global up 7.7 per cent and Xero by 5.4 per cent.
Stocks in focus
In corporate news, Magellan Financial soared 8.3 per cent as the rich lister Lowy Family took a 5.1 per cent stake in the group. It comes after Magellan announced a merger with Barrenjoey.
SkyCity Entertainment fell 3.5 per cent as it faces potential class action proceedings over its online casino operations in New Zealand. SkyCity said it denies any liability and will actively defend the proceedings.
Uranium miner Deep Yellow dropped 11 per cent after it reported a half-year loss of $7.78 million, widening from a $2.47 million drop a year ago.