Source : THE AGE NEWS
The Australian sharemarket fell in its first session of spring, with investors alarmed by the rising price of oil after the US launched its first military action in a month against Iran.
Global bond yields spiked to the highest level in almost two decades as the energy crunch fuelled inflation concerns and expectations for interest rate hikes.
The S&P/ASX 200 finished down 9.3 points, or 0.1 per cent, at 9066.70, tracking a downbeat session on Wall Street. Seven of its 11 industry sectors closed in the red. The dip came after the local bourse lost 0.2 per cent on Monday. The Australian dollar was trading at US71.66¢.
The market decline was led by sectors vulnerable to rising borrowing costs such as consumer and tech stocks, while oil companies benefited from the latest uptick in energy prices.
Concerns over the cost of oil are mounting as several current and former US and Iranian officials have said they expect the Middle East conflict to drag on for months. They’re fuelling bets that oil-price-induced inflation will push the Federal Reserve and the Reserve Bank of Australia to hike interest rates further, which pushed 10-year US bond yields up to 4.78 per cent, the highest level since January 2025. Australia’s 10-year yield jumped to 5.18 per cent, the highest level since 2011.
Rising fuel costs hurt consumers’ wallets and rate hikes would leave them with even less to spend. The fears weighed on companies dependent on consumer spending, with retail conglomerate Wesfarmers – which owns the Bunnings, Kmart and Officeworks chains – down 3 per cent. Furniture sellers Harvey Norman and Nick Scali dropped 2.6 per cent and 2 per cent respectively, and fashion jewellery chain Lovisa fell 2.4 per cent. Supermarket giants Woolworths and Coles shed 2.4 per cent and 1.5 per cent.
The borrowing-intensive tech sector was also lower. Software firms WiseTech and Technology One were down 1.7 per cent and 1.2 per cent respectively, and AI data centre NEXTDC lost 4.2 per cent. The nation’s biggest tech firm, Xero, added 0.5 per cent.
Online property ads company REA Group led communications stocks lower, slumping 4.2 per cent amid rising evidence Australia’s three-decade housing boom has ended as rates rise and buyers react to the removal of tax incentives favouring property in the May budget. In Sydney, prices are down about 7 per cent from their peak in February, property consultancy Cotality data said, and home values are falling in 93 per cent of suburbs in the nation’s capital cities.
The slump is hitting the big four banks, which have seen home loan applications drop by as much as 20 per cent since the budget.
Financial stocks, which make up more a third of the ASX, finished lower, with CBA down 0.5 per cent. The nation’s largest lender said in a housing update property prices could fall in capital cities by 10 per cent, with the downturn faster and broader than previously expected. National Australia Bank was down 0.3 per cent and Westpac dropped 0.6 per cent, while ANZ Bank rose 0.4 per cent.
On the upside, gains in energy stocks limited the market’s overall decline. Oil and gas giants Woodside (up 0.9 per cent) and Santos (up 1.7 per cent) gained as the war in the Middle East heated up again. US forces struck Iranian rocket launchers on the Strait of Hormuz on Sunday. Meanwhile, the United Arab Emirates said it intercepted an Iranian drone over its waters on Monday. The aggressive actions follow a lull in activity in the war, which has lasted more than six months.
Brent crude, the international standard, rose 2.7 per cent to $US90.49 per barrel overnight and traded at $US91.04 when the ASX closed. Brent fell below $US80 earlier in August but has since moved higher with no sign of an imminent end to the war. The conflict has curtailed traffic in the Strait of Hormuz, which accounts for about 20 per cent of the world’s oil shipments.
Australia’s biggest pharma stock CSL finished up 0.4 per cent, having jumped as much as 2.2 per cent after it said it signed a deal with the Trump administration to lower prices of its medicines in the US to avoid Washington’s 100 per cent tariff regime on foreign-made pharmaceuticals. The biotech also confirmed its commitment to an $US1.5 billion expansion of its plasma plant in Illinois.
Larvotto Resources rose 1.3 per cent after launching an antimony mine in Australia with the aim of becoming a significant producer in a supply chain otherwise dominated by China and Russia. The Hillgrove operation in NSW will provide a rare supply stream from a Western nation of a metal used widely in munitions. Larvotto said it’s now the second Australian company to mine antimony. The other producer is Alkane Resources, which gained 2.1 per cent.
On Wall Street overnight, news of the latest flare-up in the Middle East and rising bets on rate hikes in the world’s largest economy weighed on sentiment. The S&P 500 index fell 0.3 per cent. The Dow Jones Industrial Average dropped 0.7 per cent and the Nasdaq composite slipped 0.1 per cent.
The losses overnight were broad, with nearly every sector within the benchmark S&P 500 finishing in the red. Energy stocks, though, notched gains. Exxon Mobil rose 2.7 per cent and Chevron rose 2.1 per cent.
On the losing side, Amazon fell 2.5 per cent after The Wall Street Journal reported that the Federal Trade Commission and more than 20 states are preparing to sue the online retail giant over claims the company manipulated prices on its platform.
Company updates helped move several US stocks. GameStop rose 2.9 per cent after the video game retailer provided a preliminary second-quarter earnings outlook above its year-ago results. Shares of Aon slid 9.5 per cent as the company announced that it was buying insurance broker USI Insurance Services from private equity firm KKR in a deal valued at $US17 billion, including debt.
Markets were mixed in Europe and Asia.
with AP, AAP, Bloomberg
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