ASX falls as war uncertainty lingers; BHP gains on China breakthrough, Cochlear plummets

The Australian sharemarket slumped in early trade amid lingering uncertainty about the duration of the Middle East war after plans for a fresh round of talks between the US and Iran fell apart overnight, although President Donald Trump agreed to extend a ceasefire.

BHP shares gained after the mining giant finalised a supply deal with China’s state-backed iron ore buyer, ending a tense, months-long standoff. Cochlear lost a third of its market value after it issued a profit warning, saying waning consumer confidence had hit demand for its hearing aids.

The S&P/ASX 200 fell 64.20 points, or 0.7 per cent, to 8885.20 at 11.04am AEST, with healthcare and financial stocks leading its losses. The Australian dollar was 0.1 per cent higher at US71.61¢. The ASX treaded water on Tuesday as investors were holding out for any progress on peace talks.

Trump announced this morning he was extending a ceasefire with Iran indefinitely a day before it was set to expire. The US would hold off on fresh attacks on mediating nation Pakistan’s request, but would maintain its blockade of the key Strait of Hormuz, which remains at a virtual standstill.

Vice President JD Vance had been due to travel to Islamabad to resume talks with Iran, but representatives from Tehran refused to attend, citing what they said were unreasonable US demands.

“Both the US and Iran may be trying to shore up leverage and playing a game of who blinks first,” said Oversea-Chinese Banking Corp strategist Christopher Wong. “Whatever the outcome, the suspense in the interim may see risk appetite being curtailed.”

Cochlear was the biggest loser in early trade, with its shares tanking 37.5 per cent after the company shaved its profit forecast for the year by up to a third, citing uncertainty in the Middle East, the rising Aussie dollar and disappointing demand in its main markets, where consumer confidence was waning and addressing hearing loss was still being “treated as a discretionary intervention”. Full-year profit would come in at between $290 million and $330 million, down from a previous forecast of $435 million to $460 million, it warned.

Financial stocks also weighed heavily on the market, with all big four banks trading between 0.7 per cent and 1.2 per cent lower, and “Millionaires’ Factory” Macquarie Group slumping 3.7 per cent.

Defying the market’s sea of red, BHP shares climbed 1.3 per cent. The world’s biggest miner has concluded iron ore sales contract negotiations with China Mineral Resources Group, it said in an operational update. Terms, including pricing mechanisms and contract duration, weren’t disclosed.

The resolution allows BHP renewed access to its largest market after around seven months of disruption. In September, CMRG escalated a pricing dispute with the miner by urging steel mills to halt purchases of its Jimblebar Fines blend, a ban that was later extended to other BHP products over months of a breakdown in commercial negotiations.

Iron ore rivals Fortescue and Rio Tinto were flat and up 0.6 per cent, respectively, on the news. Meanwhile, gold miners Northern Star Resources (down 2 per cent), Evolution Mining (down 3.2 per cent) and Newmont (down 2 per cent) struggled as gold held a two-day decline, trading near $US4,720 an ounce, after falling more than 2 per cent in the previous session.

Energy stocks benefited as oil largely held a two-day gain amid the continuing uncertainty in the Middle East. Brent traded below $US98 a barrel after adding almost 9 per cent in the previous two sessions, while West Texas Intermediate was around $US89. Local oil and gas giants Woodside and Santos were up 0.1 per cent and 0.5 per cent. Refiners Ampol and Viva Energy climbed 4.1 per cent and 1.1 per cent, respectively.

Consumer staples and utilities were also up slightly as investors shifted to more defensive industries amid the war jitters, with Origin Energy up 0.8 per cent and Woolworths adding 0.3 per cent.

Treasury Wine Estates was the biggest winner, rallying 15 per cent after reaffirming its profit forecast for the year, citing improved depletions – a key sales metric in the wine industry – in China and the US and announcing a new, regional business structure to more effectively run its business.

In New York overnight, Wall Street and oil prices flip-flopped as the Middle East uncertainty hovered over markets.

The S&P 500 erased an early rise to fall 0.6 per cent, the Dow Jones dropped 293 points, or 0.6 per cent, after erasing an earlier gain of 400 points, while the Nasdaq composite slipped 0.6 per cent.

The US stock market remains near its most recent record, indicating optimism still remains in financial markets that the United States and Iran will avoid a worst-case scenario for the economy.

“It’s become clichéd to say that the economic hit will depend on the duration of the Middle East conflict, but that cliché does ring true,” according to Brian Jacobsen, chief economic strategist at Annex Wealth Management.

Much of the tension in financial markets has focused on what will happen to the Strait of Hormuz, a narrow waterway off Iran’s coast that oil tankers use to exit the Persian Gulf. A long-term closure would keep crude oil pent up in the gulf and away from customers worldwide.

Helping to limit Wall Street’s losses were UnitedHealth Group and other big companies that reported bigger profits for the latest quarter than analysts expected.

UnitedHealth jumped 7 per cent after also raising its forecast for profit over the full year of 2026. That’s big because stock prices tend to follow the path of corporate profits over the long term, and it’s a double-plus when companies not only top earnings estimates but also forecast better growth ahead.

Amazon added 0.7 per cent after Anthropic said it signed a new agreement and is committing more than $US100 billion ($140 billion) over the next 10 years to AWS technologies to train and run its Claude chatbot.

But they were all nevertheless overshadowed by a 2.5 per cent drop for Apple, which was the day’s heaviest weight on the S&P 500. It fell in its first trading session after Tim Cook said he’ll step down as CEO on September 1 and become the iPhone maker’s executive chairman.

Cook is handing control over to John Ternus, a company veteran who rose through Apple’s hardware engineering ranks.

In the bond market, Treasury yields rose after a report on Tuesday morning showed that US retailers made more money in March, the first full month of the war, than analysts expected. Growth was even relatively stable for retail sales when not including those from petrol stations.

The yield on the 10-year Treasury climbed to 4.31 per cent from 4.26 per cent late Monday, and the gains accelerated late in the day with oil prices.

Kevin Warsh, Trump’s nominee to chair the Federal Reserve, said that he never promised Trump he would cut interest rates, even though Trump has angrily been calling for the central bank to do so. Warsh is facing a tightrope walk as US senators consider his nomination because investors want him to maintain the Fed’s independence from political meddling.

with AP, Bloomberg

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