ASX dips as Iran war uncertainty lingers; Oil rises

The Australian sharemarket edged lower on Thursday, as oil prices climbed again amid conflicting comments from the US and Iran on efforts to end their war, which is stoking concerns of a global energy crisis.

The S&P/ASX 200 slipped 8.6 points, or 0.1 per cent, at 8525.70, with energy stocks the only clear winners of the session. The lacklustre result comes after the bourse surged 1.9 per cent on Wednesday, clawing back $55 billion in its rollercoaster ride this month. The Aussie dollar was trading at US69.53¢ at 4.45pm AEDT.

While the White House insisted peace talks with Iran are ongoing, Tehran rejected the US overtures and issued its own conditions, including sovereign control over the critical Strait of Hormuz waterway. The uncertainty sent oil prices higher again, with Brent crude, the international standard, rising to $US104 a barrel after losing more than 2 per cent on Wednesday. West Texas Intermediate traded near $US92.

“Markets are positioning for a conflict resolution, despite lingering strategic ambiguity,” said Elias Haddad at Brown Brothers Harriman & Co. “Ultimately, Iran’s response to the US de-escalation pivot will decide whether peak fear is behind us or still ahead.”

On the local sharemarket, energy stocks advanced on the back of rising oil and gas prices. Woodside Energy rose 2.3 per cent, Santos gained 2.5 per cent, and refiner Viva Energy climbed 2.5 per cent.

Fuel-dependent Qantas fell 2.2 per cent amid concerns their fuel price shock will erode its earnings. Seeking to blunt the damage, the airline said in the afternoon will add more flights to Europe to tap into demand from passengers scrambling for connections avoiding the Middle East.

Mining stocks were mixed, with BHP up 0.2 per cent, while fellow iron ore heavyweight Fortescue dropped 1 per cent and Rio Tinto added 0.7 per cent. Gold miners gave back some of their gains from Wednesday as gold prices steadied after a modest two-day recovery, holding $US4500 an ounce. Northern Star slipped 0.2 per cent, Evolution Mining dropped 2 per cent and Newmont lost 2.9 per cent.

Financial stocks were also mixed. Commonwealth Bank was up 0.6 per cent and Westpac edged up 0.2 per cent, while National Australia Bank and ANZ Bank dropped 0.3 per cent and 0.7 per cent, respectively.

With the continuing uncertainty, the cyclical tech sector suffered, seeing software makers WiseTech Global and Xero both losing 3.2 per cent.

On Wall Street overnight, the S&P 500 rose 0.5 per cent in its latest flip-flop after the United States delivered a plan to pause the war to Iran. The Dow Jones added 305 points, or 0.7 per cent, and the Nasdaq composite gained 0.8 per cent.

But the moves were shaky, and the S&P 500 briefly came close to erasing all of its jump, which maxed out at 1.2 per cent during the morning. Financial markets have swung sharply since the war began more than three weeks ago, and many of the reversals have struck hour to hour as uncertainty continues to dominate about how long the war will last.

Keeping up that uncertainty on Wednesday: Iran’s foreign minister, Abbas Araghchi, said in an interview with Iranian state TV that his government has not engaged in talks to end the war, “and we do not plan on any negotiations.”

Iran also launched more attacks on Israel and Gulf Arab countries, including an assault that sparked a huge fire at Kuwait International Airport, while coming under attack itself. The US military deployed paratroopers and more Marines to the region.

Optimism, though, was nevertheless evident in financial markets worldwide. Stock indexes climbed more than 1 per cent in London, Paris and Shanghai. Tokyo’s Nikkei 225 leaped 2.9 per cent.

In the bond market, Treasury yields also eased. That could help soften the rise in rates for mortgages and other kinds of borrowing since the beginning of the war. That in turn could lessen the pressure on the economy.

On Wall Street, Arm Holdings soared 16.4 per cent after the UK company announced a suite of chips for data centres and artificial-intelligence technology.

Robinhood Markets rallied 5 per cent to help lead US stocks after its board authorised a program to send up to $US1.5 billion ($2.2 billion) to shareholders by buying back the company’s stock.

Billionaire Elon Musk’s rocket and satellite maker SpaceX is considering a fundraising target in its IPO that would dwarf the previous largest ever debut, according to Bloomberg, as it moves forward with listing plans.

The company is weighing a ballpark figure of about $US75 billion in its initial public offering, one of the people said, asking not to be identified as the information isn’t public. SpaceX has discussed with potential investors the prospect of raising more than $US70 billion, some of the people said.

The stock prices for the parent companies of YouTube and Instagram held relatively steady after a jury found them liable in a first-of-its-kind lawsuit that aimed to hold social media platforms responsible for harm to children using their services. Alphabet added 0.2 per cent, and Meta Platforms rose 0.3 per cent.

With AP, Bloomberg

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