Source : THE AGE NEWS
The Australian sharemarket widened its losses over lunchtime, following a selloff on Wall Street and other markets as oil prices continued to advance on worries about the widening war with Iran.
The S&P/ASX 200 slumped 176.50 points, or 1.9 per cent, to 8900.80 as of 12.55pm AEDT, plunging below the 9000 mark. All 11 industry sectors were in the red bar technology, with a 3.3 per cent fall in mining stocks leading the way down. The losses come after the ASX dropped 1.3 per cent on Tuesday. The Australian dollar was trading at US70¢ at 12.52pm AEDT, down 0.5 per cent.
“For now, markets are trading headline to headline,” said Fawad Razaqzada at Forex.com. “Much will depend on whether tensions stabilise — or whether this proves to be the start of a more prolonged disruption to global supply.”
With the war front of mind, investors also digested figures from the Australian Bureau of Statistics that showed Australia’s economy expanded by 0.8 per cent through the final three months of 2025, its best performance in almost three years. Annual GPD growth lifted to 2.6 per cent.
The strong GDP outcome could help pave the way for interest rate rises by the Reserve Bank as it ”strengthens the case that the economy can tolerate another nudge tighter if inflation risks demand it,” said Sunny Nguyen, head of the Australia Economics team at Moody’s Analytics.
It’s an ugly session for the nation’s mining heavyweights amid rising concerns about the fallout of the Iran war on global growth. BHP, the world’s biggest miner, slumped 3.9 per cent. Rio Tinto fell 1.5 per cent and Fortescue Metals lost 2.9 per cent.
Gold stocks also lost their shine, as bullion prices fell 3.5 per cent overnight to settle at $US5123.70 per ounce. US bond yields jumped overnight amid concerns that rising energy costs due to the war will make inflation worse and lead to higher interest rates. When sovereign bonds such as US Treasurys pay more in interest, they can undercut the price of gold, which pays its investors nothing. Gold’s slump overnight came after a strong run that had taken it above $US5300. However, prices strengthened again on Wednesday as dip-buyers entered the fray.
Gold miners Northern Star fell 4.1 per cent, Evolution Mining lost 4.8 per cent and Newmont Mining slumped 6.7 per cent, but they’d slid even more in early trade.
The other key sector for the ASX, financials – which make up more than a third of the entire market – were also sharply lower, with all big four banks down in lunchtime trade. Commonwealth Bank fell 1.8 per cent, and so did Westpac. National Australia Bank dropped 1.5 per cent and ANZ Bank fell 2.9 per cent. “Millionaires’ factory” Macquarie dropped 1 per cent.
Airline stocks were down for a third day. Qantas fell 1.8 per cent and major Qatar Airways code-share partner Virgin Australia lost 2.1 per cent, as the escalating conflict sent fuel prices surging and continued to disrupt flights via the region.
Consumer stocks were also sold off, hurt by concerns that price rises as a result of the war will weigh on shoppers’ wallets, hurting company profits. Wesfarmers, the owner of the Bunnings and Officeworks chains, fell 1.9 per cent – as did electronics retailer JB Hi-Fi and Super Retail Group, which owns the Rebel Sports and Supercheap Auto chains.
Among the consumers staples, Endeavour lost 5.2 per cent after the owner of the Dan Murphy’s and BWS bottle shops said its first-half profit fell 17.1 per cent to $247 million in what it said was “a challenging market”. The company cut its dividend by 13.6 per cent to 10.8¢ a share. Treasury Wine Estates fell 2.8 per cent, and Woolworths was down 3.8 per cent.
Real estate investment trusts were another sector hit in the market sell-down. With bond yields rising, their dividend yields tend to become less appealing to investors compared with lower-risk, fixed income securities. Goodman Group, which owns warehouses and IT data centres, fell 3.2 per cent. Shopping centre landlords Scentre and Vicinity were down 2.4 per cent and 2.5 per cent, respectively.
Bucking the downwards trend were tech stocks, which had been sold down in the previous session amid concerns about interest rates. WiseTech Global, the nation’s biggest tech stock, was up 2.4 per cent. Software maker Xero rose 3.2 per cent and family tracking app Life 360 clawed back some of its heavy losses from Tuesday with a 2.5 per cent gain. The stock had slumped 17.9 per cent in the previous session after reporting its results, with investors underwhelmed by its profit margins.
And ARN Media, the owner of the KIIS radio network, gained 1.5 per cent after its decision to end The Kyle and Jackie O Show. Senior industry sources have labelled the move “opportunistic” and a convenient exit to the record-breaking $200 million contract with the two feuding shock jocks, which has contributed to hundreds of staff losing their jobs.
On Wall Street, the big moves that rocked US shares in early trade eased substantially as the session went on overnight. By the end of trading, the S&P 500 had sunk 0.9 per cent. That would be a solid loss on a typical day, but the index had been down as much as 2.5 per cent because of concerns the war may do more sustained damage to the global economy than feared.
The Dow Jones dropped 403 points, or 0.8 per cent, after plunging more than 1200 points earlier in the day. The Nasdaq composite pared its loss to 1 per cent.
It was just a day ago that Wall Street had opened with sharp losses, only to recover all of them and end the day with slight gains. Helping to drive that rebound was a record showing that past wars and conflicts in the Middle East have not usually meant long-term pain for US stocks.
But that was with the caveat that oil prices did not jump too high, like above $US100 per barrel. On Tuesday, oil prices rose again and raised more alarms. The price for a barrel of Brent crude, the international standard, briefly leaped above $US84.
The jump lessened through the day, though, which helped moderate the losses for stocks. Brent settled at $US81.40, up 4.7 per cent. That’s up from below $US70 less than a week ago. A barrel of benchmark US crude rose 4.7 per cent to $US74.56.
The moves showed oil prices, and how much they’re set to worsen inflation, are among the central fears for investors. More expensive fuel will mean less money for households to spend. It would also raise expenses for companies worldwide, which would likewise hurt their profits. And corporate profits are the lifeblood of stock markets.
The latest climb for oil prices came after Iran struck the US Embassy in Saudi Arabia, part of a widening of targets that also includes areas critical to the world’s oil and natural gas production. Worries are particularly high about the Strait of Hormuz off the coast of Iran, a narrow passageway where roughly a fifth of the world’s oil passes.
“The Strait of Hormuz is closed,” declared Iranian Brigadier General Ebrahim Jabbari, an adviser to the paramilitary Revolutionary Guard, vowing that any ships that passed through it would be set on fire.
The fears about oil prices ebbed a bit later in the day as President Donald Trump said the US Navy could begin escorting tankers through the strait, “if necessary,” to “ensure the FREE FLOW of ENERGY to the WORLD.”
Making things uncertain for markets are rising questions about how long this war may continue.
A major attack by the United States and Israel has already killed Iranian Supreme Leader Ayatollah Ali Khamenei, but Trump said late on Monday night on his social media network, “Wars can be fought ‘forever,’ and very successfully” with the supply of munitions that the United States possesses.
Some professional investors said again that this doesn’t look like the beginning of a long-term down market and that stocks could rebound if the war doesn’t last that long, though they acknowledge it could take a while for that to become clear, and the swings for markets show how uncertain things are.
On Wall Street, nearly three out of every four stocks within the S&P 500 dropped. Unlike a day before, influential Big Tech stocks weren’t able to prop up indexes, and Nvidia fell 1.3 per cent.
Among the winners on Wall Street was Target, which rose 6.7 per cent after the retailer reported a better profit for the latest quarter than analysts expected.
with AP and Bloomberg
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