Source : THE AGE NEWS
The Australian sharemarket has dipped lower at the open after a spike in crude oil prices eased this morning as the leaders of the US and Israel sought to reassure investors rattled by damage to major Persian Gulf energy facilities.
The S&P/ASX 200 was down 27.7 points or 0.3 per cent, to 8470.1 in early trade after another rollercoaster night on markets, dictated by fluctuating oil prices due to the Iran war. The ASX tumbled 1.7 per cent on Thursday.
US President Donald Trump told reporters he’s “not putting troops anywhere” after being asked about the possibility of deploying US ground troops, while Israeli Prime Minister Benjamin Netanyahu said Israel would refrain from more attacks on Iranian energy facilities.
Trump tried to downplay the recent spikes in oil prices during an appearance with Japan’s prime minister.
“I thought there was a chance it could be much worse,” he said. “It’s not bad, and it’s going to be over with pretty soon.”
In early trade on the ASX, energy stocks continue to be bolstered by the strength in oil prices with Woodside Energy adding 0.8 per cent and Santos up 0.9 per cent. Ampol was flat shortly after trade opened.
Financial stocks are stronger, with the big four banks all in the green. National Australia Bank led the way with a 1 per cent gain, while Commonwealth Bank advanced 0.8 per cent, Westpac rose 0.7 per cent and ANZ Bank climbed 0.3 per cent.
Mining stocks lost ground amid concerns a war-induced slowdown in the global economy will hurt demand. BHP fell 2.3 per cent, Rio Tinto lost 2.7 per cent and Fortescue shed 1.3 per cent. Gold miners retreated as the price of the safe haven extended its losses overnight with Evolution Mining shedding 1.2 per cent and Northern Star 0.7 per cent in early trade. Silver prices also fell, driving South32 2.7 per cent lower.
Solomon Lew’s Premier Investments jumped 7.2 per cent on its results. Peter Alexander sales rose 4.9 per cent and Smiggle declined 10.7 per cent.
The Australian dollar was trading at US70.82¢ at 10.32am AEDT.
On Wall Street, the S&P 500 fell 0.3 per cent after erasing an earlier drop of 1 per cent. The Dow Jones lost 0.4 per cent, and the Nasdaq composite fell 0.3 per cent. Markets in Europe and Asia had considerably larger losses, when oil prices were higher earlier in the day.
Brent crude, the international standard, briefly rose above $US119 ($168.70) per barrel in the morning before pulling back to $US108.65. A barrel of benchmark US crude was 1.8 per cent lower to $US93.74.
Trump and countries around the world have made moves to stem the spike in oil prices, but they’re mostly short-term fixes when markets want to see less risk for oil and gas fields around the Gulf and a clearance of the Strait of Hormuz off Iran’s coast, where a fifth of the world’s oil typically sails.
Worries are so high about oil prices that traders are now even betting on a slim chance that the Federal Reserve may have to hike interest rates this year. It’s a dramatic turnaround from before the war, when traders were betting heavily that the Fed would cut rates multiple times this year.
Cuts to rates would give the economy and prices for investments a boost, and they’re something Trump has angrily been calling for, but they would risk worsening inflation. The Fed on Wednesday decided to hold off on cutting interest rates at its latest meeting, and traders found comments from Chair Jerome Powell discouraging about the possibility for cuts in 2026.
Now, traders are betting on an 8 per cent chance the Fed could hike its main interest rate by the end of the year and an 80 per cent chance that it will at least hold steady, according to data from CME Group. Just a month ago, those same traders were betting on a 74 per cent probability of two or more cuts.
That drove Treasury yields higher, and the two-year Treasury yield touched its highest level since mid-2025.
The more widely followed 10-year Treasury yield rose to 4.28 per cent from 4.26 per cent late on Wednesday, up from just 3.97 per cent before the war with Iran started. Earlier in the day, the Bank of Japan, the European Central Bank and the Bank of England held their own interest rates steady.
Besides the threat of higher inflation, a couple of solid reports on the US economy also helped to lift Treasury yields. One said fewer US workers applied for unemployment benefits last week, when economists were expecting a slight rise. Another said growth for manufacturing in the mid-Atlantic area unexpectedly accelerated.
Higher Treasury yields have already sent rates for mortgages and other kinds of loans upward, and a report on Thursday showed sales of new US homes unexpectedly weakened in January.
Higher Treasury yields also grind down on prices for all kinds of investments, from stocks to crypto to gold.
Stocks of companies that mine such metals fell to some of Wall Street’s sharpest losses. Newmont dropped 6.9 per cent, and Freeport-McMoRan sank 3.3 per cent.
Helping to limit Wall Street’s losses was Rivian Automotive, which jumped 3.8 per cent. It announced a partnership where Uber will invest up to $US1.25 billion ($1.8 billion) in the company and expects to buy 10,000 autonomous robotaxis. Uber Technologies fell 1.7 per cent.
With AP, Bloomberg
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