ASX Drops on Middle East War; Energy, Gold Stocks Rocket
The Australian sharemarket fell from record highs after a US-led strike killed Iran’s supreme leader Ali Khamenei and much of the regime’s senior leadership. Brent crude surged more than 10%.
The S&P/ASX 200 Index fell 37.30 points, or 0.4%, to 9161.30, with eight of the 11 sectors in negative territory as investors piled into safe-haven assets including the US dollar and gold.
Brent crude spiked 13% to $US82 a barrel at the open, while gold climbed 1.6% after Iran retaliated to the US-Israel attack with strikes on nearby Gulf countries, including Iraq, Kuwait, Bahrain, Qatar, the United Arab Emirates and Oman.
The conflict disrupted key aviation hubs and oil shipments through the Strait of Hormuz.
Capital.com senior market analyst Kyle Rodda said markets had not priced in a comprehensive strike on Iran. “The impact could have shades of the Russian invasion of Ukraine, albeit with a more modest impact on global economic fundamentals because of Iran’s size and relative isolation from the world economy.”
On the ASX, the energy sector surged by nearly 6% with Woodside up 6.2%, Santos 6% and Beach Energy by 8%.
The flight to gold buoyed the miners. Newmont rocketed 7.1%, Northern Star 4.3% and Evolution Mining 6.3%.
Lynas Rare Earths added 4.3% as it received confirmation from Malaysia’s atomic energy regulator that its operating licence has been renewed for 10 years until 2036.
Financials were the main drag on the bourse, led by heavy selling of the big four lenders. That’s after banks and private equity firms were sold off on Wall Street on Friday after UK mortgage provider Market Financial Solutions collapsed into insolvency.
Commonwealth Bank fell 1.6%, ANZ by 2.2%, Westpac by 2.1% and National Australia Bank by 2.8%.
Selling of the batter technology sector also resumed, with WiseTech Global off 4.9%, Xero 4.8% and NextDC by 2.9%.
In corporate news, Magellan Financial was in trading halt as the investment manager launched an equity raising to fund a $1.6 billion merger with Barrenjoey Capital Partners.
Ampol rose 3.3% as further assessment by the Australian Competition and Consumer Commission identified 54 EG Australia sites across 51 areas that may raise competition concerns, down from 115 locations flagged in January, as part of a planned takeover.
Web Travel dropped 5.9% as disruption to global air travel weighed. It came as chief financial officer Tony Ristevski withdrew his resignation made in November.
MA Financial fell 3.1% after it agreed to sell Infinite Care, the sole asset of its MA Aged Care Fund, to Anglicare Sydney for an undisclosed sum, delivering investors more than 2.8 times their invested capital over the life of the fund.
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