Miners dive as ASX falls again; Lowy takes Magellan stake

The Australian sharemarket has slumped at the open with mining stocks bearing the brunt of the pain in early trade after another volatile night on global markets.

The S&P/ASX 200 was down 101.5 points, or 1.1 per cent, to 8838.8 in early trade, with nine of 11 industry sectors in negative territory. The materials sector was the heaviest weight on the index as mining stocks tumbled.

Iron ore miners came under renewed pressure after China’s state-backed iron ore buyer summoned traders and urged them to refrain from buying new BHP cargoes to sell to buyers in the country after they were found to be flouting a restriction on the purchases. BHP lost 4.4 per cent while Rio Tinto tumbled 4.8 per cent and Fortescue lost 2.4 per cent. There was pain for gold stocks as well after the price of the safe haven fell overnight. Evolution Mining lost 3.8 per cent, Northern Star shed 4.4 per cent and Newmont retreated 2.2 per cent.

The big four banks retreated with Commonwealth down 0.4 per cent, National Australia Bank losing 1.1 per cent, Westpac falling 1.4 per cent and ANZ Group 1.1 per cent lower. Magellan Financial Group disclosed that a trust for the benefit of the Lowy family had bought a stake 5.1 per cent stake in the fund manager, after it this week announced a deal to merge with its part-owned investment bank, Barrenjoey. Magellan shares were down 1.9 per cent in early trade.

Energy stocks were boosted by a fresh surge in oil prices, with Woodside Energy up 1.1 per cent and Santos advancing 1.5 per cent. The price for a barrel of benchmark US crude shot up 8.5 per cent to settle at $US81.01 per barrel, its highest mark since mid-2024. Brent crude, the international standard, climbed 4.9 per cent to $US85.41 per barrel. Oil prices gave back some of those gains later in the day, which helped stocks in the US moderate their losses at the end of trading. But worries nevertheless remain high about how long disruptions will last for oil production because of the escalating war with Iran.

Tech stocks continued to rise, with WiseTech up 3.8 per cent and bouncing 3.7 per cent.

The Aussie dollar was trading at US70.13¢ at 10.20am AEDT.

Overnight, the S&P 500 fell 0.6 per cent and erased what had been a small gain for the year so far. The Dow Jones briefly dropped more than 1100 points before finishing with a loss of 784, or 1.6 per cent. The Nasdaq composite slipped 0.3 per cent.

Wall Street’s losses came as financial markets around the world keep following the cue of oil prices. Sharp increases there are raising worries that a long-term surge could grind down the global economy, exhaust households’ ability to spend and push interest rates higher.

Prices at US petrol pumps have already leaped because of them. The average price for a gallon is $US3.25, up 9 per cent from $US2.98 a week ago, according to auto club AAA.

If oil prices spike further, like to $US100 per barrel, and stay there, some analysts and investors say it could be too much for the global economy to withstand. Uncertainty about what will happen has caused frenetic swings across financial markets this week, sometimes hour by hour.

Much will depend on what happens with the Strait of Hormuz. Roughly a fifth of the world’s oil typically sails through the narrow waterway off Iran’s coast.

To be sure, the US stock market has a history of bouncing back relatively quickly following conflicts in the Middle East and elsewhere, as long as oil prices don’t jump too high for too long. That has many professional investors suggesting patience and riding through the market’s swings.

“While further escalation remains a risk, we think the more likely outcome is an increase in market risk aversion that likely lasts only a short time until investors can see a winding down of hostilities,” according to Scott Wren, senior global market strategist at Wells Fargo Investment Institute.

The S&P 500 is down only 0.7 per cent for the week so far, despite its sharp swings, as gains for Big Tech stocks and oil producers have helped to blunt losses across the rest of the market.

Stocks of airlines fell to some of the US market’s worst losses again on Thursday. Higher oil prices are increasing their already big fuel bills, while the war has left hundreds of thousands of passengers stranded across the Middle East.

American Airlines lost 5.4 per cent, United Airlines fell 5 per cent and Delta Air Lines sank 3.9 per cent.

Wall Street’s drop would have been worse if not for Broadcom. The chip company’s stock rose 4.8 per cent after it reported stronger profit and revenue for the latest quarter than analysts expected. It’s one of Wall Street’s most influential stocks because it’s one of the biggest by total value, and CEO Hock Tan said it benefited from a 74 per cent jump in revenue for AI chips.

With AP, Bloomberg

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