Source : THE AGE NEWS
Oil prices jumped sharply and the Australian sharemarket slid lower at lunchtime on Monday as disruption from the Middle East conflict heightens investor anxiety and strengthens interest in safe haven trades.
The S&P/ASX 200 lost 44.1 points, or 0.5 per cent, in early trade, with eight of the 11 industry sectors in negative territory. Oil resumed trading on Monday morning for the first time since the US and Israel launched the first attack on Iran on Saturday. Brent, the international standard, jumped 5.5 per cent and West Texas Intermediate crude rose 4.8 per cent just after midday.
Energy companies soared on the back of oil’s jump. Woodside Energy was up 5.5 per cent, Santos rocketed 5.2 per cent, Yancoal surged 5.2 per cent and Ampol bounced 2.1 per cent higher.
Roundhill Financial’s Dave Mazza said he was closely tracking what happens to maritime traffic at the Strait of Hormuz, a narrow waterway that handles about one-quarter of the world’s seaborne oil trade.
“This is about Hormuz risk, not retaliation. If shipping stays open, stocks can work through it,” Mazza said. “If it doesn’t, all bets are off.”
Ajay Parmar, the director of energy and refining at ICIS, said: “While the military attacks are themselves supportive for oil prices, the key factor here is the closing of the Strait of Hormuz.”
More than 20 per cent of global oil is moved through the Strait of Hormuz. “We expect prices to open [after the weekend] much closer to $US100 a barrel and perhaps exceed that level if we see a prolonged outage of the Strait,” Parmar said.
Australian gold miners jumped after the precious metal – long considered a safe investment in uncertain times – surged. Northern Star added 3.7 per cent while Evolution Mining jumped 5.9 per cent in early afternoon trade. Price movements among the iron ore heavyweights are mixed, with Rio Tinto up 1.3 per cent, BHP flat and Fortescue slumping 4.3 per cent.
Financial stocks lost ground. Heavyweight Commonwealth Bank was down 2.2 per cent, National Australia Bank lost 3.4 per cent, Westpac shed 3.1 per cent and ANZ Group was 2.6 per cent lower.
The focus on oil and travel disruptions left Qantas 6.1 per cent lower. Fuel is a large cost for carriers and increases can easily erode margins or push up ticket prices, making them less attractive to passengers.
Star Entertainment advanced 1.2 per cent in its first trade since releasing its results. The casino operator posted a $109.7 million loss for the December half-year as revenue continued to decline at its operations in Sydney and Queensland under the weight of regulatory reforms, including cash limits at Star Sydney. Its unaudited half-year accounts, posted late on Friday night, showed a 10 per cent decline in revenue to $584.9 million.
The Australian dollar was trading at US71.03¢ at 12.45pm AEDT.
US stocks sank Friday as Wall Street kept punishing companies that could become losers in the artificial-intelligence revolution. A surprisingly discouraging update on inflation also hurt the market, while oil prices climbed with worries about tensions between the United States and Iran.
The losses came as investors returned to knocking down software companies and other businesses they suspect could get supplanted by AI-powered competitors.
Block, the company behind Cash App, Square and other businesses, gave a potential signal of what AI could do after Chair Jack Dorsey said it’s cutting its workforce by nearly half. That’s even though he said 2025 was a strong year for the company, which is sending more cash to shareholders through stock buybacks.
“Intelligence tools have changed what it means to build and run a company,” Dorsey said in a letter to investors while announcing Block’s latest profit results. “We’re already seeing it internally. A significantly smaller team, using the tools we’re building, can do more and do it better.”
The co-founder of Twitter (now X) also said, “I don’t think we’re early to this realisation. I think most companies are late. Within the next year, I believe the majority of companies will reach the same conclusion and make similar structural changes.”
Block is cutting more than 4000 jobs from its workforce of more than 10,000. Its stock jumped 16.8 per cent after making the announcement, while announcing its latest quarterly results.
Even the companies currently seeing their revenue and profit soar because of AI-related demand are under pressure. Nvidia fell 4.2 per cent and was the heaviest weight on the US stock market. A day earlier, it dropped to its worst loss since last spring even though it reported a better profit than analysts expected and forecast more in revenue for the current quarter.
On the winning side of Wall Street was Netflix, which climbed 13.8 per cent after walking away from its bid to buy Warner Bros. Discovery’s studio and streaming business. That put Skydance-owned Paramount in a position to take over its Hollywood rival.
Paramount Skydance shares jumped 20.8 per cent, while Warner Bros. Discovery fell 2.2 per cent.
