Source : THE AGE NEWS
The Australian sharemarket fell again in early trade as uncertainty lingers if and when the US and Iran will find a negotiated solution to end the two-month war that’s choked energy supplies and heightened inflation risks.
The S&P/ASX 200 dropped 54.4 points, or 0.6 per cent, to 8712 as of 10.59am AEST, with energy stocks the only sector modestly in the green as traders weighed the next steps toward peace talks over the Iran war, with the US discussing a proposal from Tehran while the crucial Strait of Hormuz remained almost impassable.
The ASX lost 0.2 per cent on Monday. The Australian dollar was trading at US71.86¢.
Utilities led the bourse’s declines in early trade, pushed down by a 4.1 per cent slump in Origin Energy and a 1.1 per cent drop in AGL Energy. Origin said on Monday its LNG production fell in the March quarter and revenues also slipped due to lower realised LNG prices and the rise in the Aussie dollar. “Global commodity markets have experienced significant volatility this quarter, with the conflict in the Middle East affecting oil and LNG supply,” Origin’s CEO Frank Calabria said in a statement. “Changes in oil prices have a lagged effect on Australia Pacific LNG’s long-term export contracts, and we do not expect this to flow through to results until FY 2027.”
Cyclical sectors dependent on economic growth such as consumer discretionary stocks and tech also declined. Wesfarmers, which owns the Officeworks, Kmart and Bunnings chains, dropped 1.4 per cent, while pokies maker Aristocrat shed 1.2 per cent and furniture retailer Harvey Norman fell 1.3 per cent. Software makers WiseTech Global, Xero and Technology One were down 1.1 per cent, 1.7 per cent and 1.1 per cent, respectively.
The financial sector, crucial for the ASX as it makes up more than a third of the entire market, was also in the red, with all big four banks trading lower. CBA dropped 1 per cent, Westpac shed 0.9 per cent, National Australia Bank fell 0.7 per cent and ANZ Bank slipped 0.1 per cent.
The mining giants were also lower, with BHP and Rio Tinto down 1.1 per cent and 1.9 per cent, and gold producers Northern Star and Evolution Mining losing 2.7 per cent and 1.5 per cent. Fortescue, however, bucked the trend with a 1.9 per cent rise after Bloomberg reported the company is close to signing a supply agreement with China’s state-backed iron ore buyer, following BHP’s deal last week that ended a months-long standoff.
Meanwhile, energy stocks largely held their ground in the market’s sea of red, with oil prices holding their gains from overnight as tankers find the Strait of Hormuz still effectively closed. That’s keeping crude stuck in the Middle East and away from customers worldwide, including oil produced by Iran that’s being blockaded by the US Navy.
Iran has offered to reopen the strait if the US ends its blockade, while proposing that discussions on the larger question of its nuclear program would come in a later phase. But Donald Trump seems unlikely to accept the offer, which was passed to the Americans by Pakistan.
The price for a barrel of Brent crude to be delivered in June climbed 2.8 per cent to settle at $US108.23 overnight. Brent to be delivered in July, which is where more of the trading is happening in the oil market, rose 2.6 per cent to $US101.69 per barrel. Brent prices were at only about $US70 per barrel before the war and have briefly shot to nearly $US120 a couple times when fears about the war have hit their heights.
Oil and gas giant Santos was up 0.5 per cent in early trade, while fellow fossil fuel producers Yancoal and Whitehaven Coal were up 0.6 per cent and 2.2 per cent, respectively. Woodside Energy, however, dropped 0.4 per cent.
On Wall Street overnight, the US stock market’s record-breaking rally slowed after uncertainty rose over the weekend about what will happen next in the Iran war. The S&P 500 inched 0.1 per cent higher to its latest all-time high, a downshift following weeks of big gains driven by strong corporate profit reports and hopes that the economy can avoid a worst-case scenario because of the war. The Dow Jones dipped 0.1 per cent, while the Nasdaq composite rose 0.2 per cent to its own record.
Even with more expensive fuel bills, most big US companies have been reporting profit growth for the start of 2026 that’s even stronger than analysts expected. That in turn has helped the S&P 500 jump 13 per cent since hitting a low in late March.
The coming days could be a blockbuster for the market, with several of Wall Street’s most influential stocks scheduled to deliver their profit reports. Alphabet, Amazon, Meta Platforms and Microsoft are all scheduled to report on Wednesday alone [early Thursday AEST]. Apple will report the following day.
Overnight, it was announced Microsoft is losing exclusive access to OpenAI’s technology, clearing the way for the ChatGPT creator to sell its products across rival cloud platforms in a sweeping change to one of the artificial intelligence era’s most consequential alliances. The reworked tie-up, announced jointly by the companies on Monday, retains Microsoft as OpenAI’s primary cloud partner with a license to the startup’s intellectual property through 2032. It also paves the way for OpenAI to take its models to Amazon.com’s cloud unit, without any technical workarounds.
Verizon Communications joined the list of companies topping analysts’ expectations on Monday, and its stock rose 1.5 per cent after the company said it added more postpaid phone customers than it lost during a first quarter for the first time since 2013. It also raised its forecast for profit growth this year, even though its revenue for the first quarter fell short of analysts’ expectations.
Domino’s Pizza helped drag on the market and fell 8.8 per cent after it reported weaker profit and revenue for the latest quarter than analysts expected.
In the bond market, Treasury yields ticked higher following the rise in oil prices. The yield on the 10-year Treasury note rose to 4.33 per cent from 4.31 per cent late Friday.
The Federal Reserve will announce its latest move on short-term interest rates on Wednesday, and the consensus expectation among traders is that it will hold the federal funds rate steady. Lower rates would give the economy a boost, but they would also threaten to worsen inflation when oil is more expensive and tariffs are threatening to raise prices for all kinds of other products.
Wednesday will likely be the final meeting where Chair Jerome Powell will lead the Fed. His term as chair is scheduled to expire next month, and Trump has already named a nominee to replace him, Kevin Warsh.
The European Central Bank, Bank of Japan and Bank of England will also be announcing their own interest-rate decisions this week.
In other international markets, indexes slipped in Europe following a stronger finish in Asia. South Korea’s Kospi jumped 2.2 per cent, and Japan’s Nikkei 225 rose 1.4 per cent for two of the world’s bigger moves.
with AP, Bloomberg and Reuters
The Market Recap newsletter is a wrap of the day’s trading. Get it each weekday afternoon.
