ASX higher as banks jump; BHP, Northern Star fall

The Australian sharemarket has erased early losses and moved into the green by lunchtime on Friday after another volatile night on global markets, with oil prices hitting $US100 a barrel.

The S&P/ASX 200 added 22.9 points, or 0.3 per cent, to reach 8651.9 by 12.40pm AEDT, clawing back some of Thursday’s 1.3 per cent loss. Seven of 11 industry sectors were higher, led by financial and energy stocks.

Action again centred on the oil market overnight, where the price of a barrel of Brent crude, the international standard, rose 9.2 per cent to settle at $US100.46. Worries are worsening that the war could block production of oil in the Persian Gulf for a long time and cause a debilitating surge of inflation in the global economy. A barrel of benchmark US crude rose 9.7 per cent to settle at $US95.73.

On the ASX, energy stocks were stronger on the back of the rising oil prices, with Santos up 1.7 per cent, Woodside Energy advancing 1.3 per cent and Ampol climbing 1.8 per cent. Energy Minister Chris Bowen signalled plans to release an extra 800 million litres of petrol and diesel from domestic reserves.

Iron ore giants Rio Tinto (up 3.4 per cent) and Fortescue (up 6 per cent) surged as iron ore prices rose on supply concerns, but BHP fell 1.2 per cent after China’s state-run steel iron ore buyer expanded a ban on one of the miner’s products. Gold miner Northern Star tumbled 16.4 per cent after warning that it would be “challenging” to reach the bottom end of its production guidance due to weak performance over the past two months. Fellow gold player Evolution Mining was down 0.3 per cent in early trade.

Financial stocks have advanced, with the big four banks all higher: Commonwealth Bank and National Australia Bank each rose 1.8 per cent while Westpac added 1.7 per cent and ANZ Group advanced 1.7 per cent. The Reserve Bank will meet on Tuesday and money markets have priced in a more than 70 per cent chance of an interest rate hike.

Qantas slid 0.1 per cent after announcing it will pay $105 million to settle a class action over flights cancelled during COVID. Virgin Australia added 0.4 per cent.

Tech stocks were mixed, continuing their volatile week. WiseTech slumped 1.8 per cent while Zero rose 1.9 per cent and Technology One added 0.9 per cent.

The Australian dollar was trading at US70.80¢ at 12.52pm AEDT.

On Wall Street, the S&P 500 fell 1.5 per cent and resumed its sharp swings following a couple of days of relative calm. The Dow Jones dropped 739 points, or 1.6 per cent, and the Nasdaq composite lost 1.8 per cent.

Iran’s new supreme leader released his first statement on Thursday since succeeding his late father, saying his country would keep up attacks on Gulf Arab neighbours and use the effective closure of the Strait of Hormuz as leverage against the United States and Israel. A fifth of the world’s oil typically sails through the strait, and oil producers in the region are cutting production because their crude has nowhere to go.

Countries around the world are trying to make up for that, and the International Energy Agency said on Wednesday that its members would release a record amount of oil, 400 million barrels, from stockpiles built for such emergencies.

But such moves are short-term fixes, and they do not clear the long-term risks. Analysts have said that if the Strait of Hormuz remains closed, oil prices could jump to $US150.

To be sure, the US sharemarket has a history of bouncing back relatively quickly from military conflicts in the Middle East and elsewhere, as long as oil prices don’t stay too high for too long. Even with all the up and down swings of the past couple of weeks, many rocking markets hour to hour, the S&P 500 is just 4.4 per cent below its all-time high set in January.

What’s made this jump for oil prices frightening is not only the degree – prices jumped to almost $US120 a barrel this week, their highest level since 2022 – but that they’re occurring during an uncertain time for the economy.

Last month’s hiring by US employers was surprisingly weak, which raised worries about a possible worst-case scenario for the economy called “stagflation”. That’s where economic growth stagnates while inflation remains high, and it’s a miserable mix that the Federal Reserve has no good tools to fix.

A more encouraging signal arrived on Thursday. A report said that the number of US workers applying for unemployment benefits inched lower last week. That’s a sign that layoffs are potentially remaining low around the country.

Some of Wall Street’s worst losses again hit companies with big fuel bills. Cruise-ship operator Carnival fell 7.9 per cent, and United Airlines sank 4.6 per cent.

Worries about the private-credit industry also continued to hurt the market. Investors have been pulling their money out of some funds and companies that have lent to businesses whose profits are under threat. Many of the worries are focused on businesses that may not pay back their loans because of competition from AI-powered rivals.

Morgan Stanley fell 4.1 per cent after its North Haven Private Income Fund said it had allowed investors to redeem 5 per cent of its total shares instead of the almost 11 per cent they had requested. That 5 per cent cap is the advertised limit.

European sharemarkets retreated, with the Euro Stoxx 50 shedding 0.8 per cent.

With AAP, AP

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