Source : the age
By Staff writers
Welcome to your five-minute recap of the trading day.
The numbers
The Australian sharemarket was treading water on Tuesday after US President Donald Trump called for the evacuation of Tehran, in comments that contrasted with earlier optimism that Israel’s war against Iran wouldn’t escalate into a wider conflict.
Swinging between minor gains and losses most of the session, the S&P/ASX 200 finished down 7.1 points, or less than 0.1 per cent, at 8541.3, with seven of the 11 industry sectors in the red. The index had added just 1 point on Monday. The Australian dollar was up 0.3 per cent at US65.40¢ at the time the sharemarket closed.
Wall Street has started the week with strong gains, but uncertainty over the war in the Middle East is making local investors wary.Credit: AP
Miners, tech and property stocks gained, though no sector rose more than 0.4 per cent, while the big four banks and utilities were down. The three biggest stocks on the ASX – CBA, BHP and National Australia Bank – all finished lower, weighing on the market.
The lifters
Gold miners rose as Trump’s warning boosted demand for havens. Bullion edged up as much as 0.4 per cent to top $US3400 an ounce, following a 1.4 per cent slide on Monday, which was the biggest daily decline in a month. Northern Star Resources shares rose 1.5 per cent and Newmont Corporation gained 2.5 per cent.
A rally in uranium producers boosted the energy sector after Canadian asset manager Sprott said it would buy some $US200 million ($306 million) worth of the metal for its dedicated physical uranium trust. Paladin Energy climbed 4.4 per cent, Boss Energy gained 3.2 per cent, and Deep Energy jumped 5.7 per cent.
Oil and gas producer Santos added 0.5 per cent as investors digested Monday’s $29 billion takeover bid from Abu Dhabi’s national oil company and US global private equity firm Carlyle, and weighed the chances the deal will be cleared by the Albanese government at a time of heightened energy insecurity.
Tech stocks also ticked higher, led by modest rises for software makers WiseTech Global (up 0.2 per cent) and Xero (up 0.4 per cent), while data centre landlord Goodman Group (up 1.1 per cent) boosted the property sector.
The laggards
The iron ore heavyweights declined, with BHP and Fortescue both down 0.4 per cent and Rio Tinto flat as iron ore headed for the lowest close since September on a seasonal slowdown in demand and signs Chinese mills are curbing steel output.
Financial stocks, which make up more than a third of the local market, also finished lower. CBA – the nation’s biggest lender and the biggest stock on the ASX – shed 0.2 per cent. National Australia Bank fell 0.4 per cent, and Westpac and ANZ both dropped 0.5 per cent.
The lowdown
Investors again seemed sidelined after a flat session on Monday, which was not necessarily a bad thing, according to AMP chief economist Shane Oliver.
“Conflicts regularly flare up in the Middle East only to settle down, so the key is not to get too negative and look for any opportunities that the conflict throws up,” Oliver said.
“Since World War II, US shares have fallen on average by 6 per cent in response to geopolitical events but have risen by 9 per cent six months later and by 15 per cent 12 months later.”
US futures were trending down and oil rose following Trump’s comments in a social media post from the Group of Seven leaders’ summit in Alberta, Canada. It wasn’t clear what he was referring to, but hours earlier Trump had said Iran wanted to make a deal, sparking hopes the fighting could remain contained and pushing Wall Street higher in its session overnight.
Asked if the US would get more involved militarily, Trump said he didn’t want to discuss it. However, he cut short his visit to the G7 and returned to Washington because of the unfolding tensions in the Middle East, which fanned speculation the US may be preparing to join Israel in its attacks.
In another social media post, written after boarding Air Force One for his flight back to DC, Trump wrote that his early departure from the meeting in Canada had “nothing to do” with working on a ceasefire between Israel and Iran, saying his reason was “much bigger than that”.
The see-saw session on the local sharemarket came despite a rally on Wall Street overnight, where the S&P 500 climbed 0.9 per cent, the Dow Jones rose 0.8 per cent, and the Nasdaq composite gained 1.5 per cent.
Israel and Iran are continuing to attack each other, and a fear remains that a wider war could constrict the flow of Iran’s oil to its customers. That in turn could raise petrol prices worldwide and keep them high.
But past conflicts in the region have seen spikes for crude prices last only briefly. They’ve receded after the fighting showed that it would not disrupt the flow of oil, either Iran’s or other countries’, through the narrow Strait of Hormuz off Iran’s coast.
Wall Street has plenty of other concerns in addition to the fighting in Iran and Israel. Key among them are the Trump tariffs, which still threaten to slow the world’s largest economy and raise inflation if the US government doesn’t win trade deals with other countries to reduce Trump’s taxes on imports.
Later this week, the Federal Reserve is set to discuss whether to lower or raise interest rates, with the decision due on Wednesday. The nearly unanimous expectation among traders and economists is that the Fed will make no move.
More important for financial markets on Wednesday is likely to be the latest set of forecasts that Fed officials will publish for where they see the economy and interest rates heading in upcoming years. Economists at Bank of America say it could show a forecast for just one cut to interest rates this year, along with three more in 2026.
