Source : THE AGE NEWS
The Australian sharemarket has made a nervy start to the week after an escalation of tensions in the Middle East over the weekend.
The S&P/ASX 200 was down 33.3 points, or 0.4 per cent, to 8913.6 in early trade, with six of 11 industry sectors in positive territory. Energy shares are the biggest weight on the index, with Viva Energy slumping after resuming trade following the fire at its Geelong refinery.
Shares had been on course for a strong open after Wall Street rallied last week but a number of developments in the Iran war since then has harmed sentiment.
Shares rose on Wall Street on Friday in New York and oil prices plunged after Iran said the Strait of Hormuz was open again for commercial tankers carrying crude from the Persian Gulf to customers worldwide. However, the Islamic Revolutionary Guards Corps said on Sunday (AEST) it will prevent ships passing through the strait, closing the crucial waterway again while a US blockade on Iranian ports remains in place, a move Iran says violates the terms of a ceasefire agreement.
US president Donald Trump then threatened strikes on Iranian power plants and bridges overnight if a deal is not reached before the ceasefire deadline this week.
“The market’s still carrying a risk premium into the deadline but just not fully committing to it,” said Haris Khurshid, chief investment officer at Karobaar Capital in Chicago. “If things just continue as they are, you probably see a gradual push higher to around $US105–$US115, but with a lot of back and forth on headlines.”
Energy stocks are stronger after oil and natural gas prices soared this morning once trading resumed. Brent jumped as much as 7.9 per cent, erasing most of its declines on Friday, while US oil jumped 7.2 per cent. European gas increased as much as 11 per cent. Woodside Energy lost 1 per cent while Santos shed 0.7 per cent and Ampol was flat.
Viva Energy slumped 8.7 per cent in its first trading session since the fire at its Geelong refinery which started on Wednesday night. In an update on Monday morning, Viva said it expects to ramp back up to above 90 per cent of its maximum output within weeks. Assessments conducted over the weekend had confirmed the blaze was confined to the alkylation unit, which converts gases into a component needed in petrol, the company said. Other major processing units in the petrol-production complex were unaffected.
Financial stocks are weaker, with National Australia Bank slumping 2.9 per cent. The bank on Monday revealed it would lift its first-half credit impairment charges by $300 million to account for the impact of “fuel supply and cost issues related to the Middle East conflict, taking the total amount to $706 million.
About half of the increase, roughly $152 million, reflects the higher likelihood of a worsening economy, while the bank has also lifted provisions to recognise “potential stress which may emerge in sectors more likely to be impacted by fuel supply and cost issues related to the Middle East conflict”.
The rest of the big four banks are lower, with Commonwealth Bank down 0.4 per cent, Westpac 0.5 per cent and ANZ Bank 1.1 per cent.
Mining stocks slid lower with Rio Tinto losing 1.1 per cent, BHP 0.2 per cent and Fortescue 0.4 per cent. Gold stocks lost ground, with Evolution Mining shedding 2 per cent and Northern Star 1 per cent.
Tech stocks are mixed with WiseTech losing 0.4 per cent but Xero added 0.6 per cent and Technology One was 0.3 per cent higher in early trade.
The Australian dollar was trading at US71.45¢ at 10.30am AEST.
The standoff over Hormuz — through which about a fifth of the world’s oil and liquefied natural gas flowed before the US-Israeli war on Iran began at the end of February — threatens to deepen the global energy crisis and is undermining Trump’s weekend prediction of a quick end to the conflict. The waterway is just one of the unresolved issues, which also include Iran’s nuclear capabilities and Israel’s ongoing invasion of Lebanon.
Before the latest developments, Wall Street’s S&P 500 leaped 1.2 per cent to an all-time high and closed out a third straight week of big gains, its longest streak since Halloween. The Dow Jones Industrial Average surged as many as 1100 points before paring its gain to 868, or 1.8 per cent. The Nasdaq composite climbed 1.5 per cent.
Several times since the war began, optimism on Wall Street has quickly deteriorated into doubt about a possible end to the fighting. That in turn has caused vicious and sudden swings of prices for everything from stocks to bonds to oil.
A strong start to the earnings reporting season for big US companies has also helped support the US stock market, and more financial companies joined the list delivering bigger profits for the start of 2026 than analysts expected.
State Street rose 2.5 per cent, and Fifth Third Bancorp added 1.7 per cent after both reported better results for the latest quarter than expected.
They helped offset a 9.7 per cent slide for Netflix, which fell even though it delivered a better profit than expected. It did not raise its forecast for revenue growth for the full year, which analysts said may have disappointed some investors.
It also said Reed Hastings, cofounder and chairman of the streaming company, will step down from its board of directors in June when his term expires.
With AP, Bloomberg
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