Staff writers
Updated ,first published
The Australian sharemarket has bounced at the open to claw back some of Monday’s heavy losses and oil prices have tumbled after US President Donald Trump signalled the Iran war could end soon.
The S&P/ASX 200 added 140.8 points, or 1.6 per cent, in early trade, with 10 of 11 industry sectors in positive territory. Energy stocks fell as oil prices tumbled from $US120 per barrel to below $US90. The market’s upward momentum comes after it lost 2.9 per cent on Monday as panic spread through global markets.
Sentiment was boosted late in Wall Street’s session after Trump told CBS News that he thinks “the war is very complete, pretty much”. Trump’s comments calmed worries that had built earlier in the day, when the price for a barrel of Brent crude, the international standard, briefly touched $US119.50. It hadn’t been that expensive since 2022, after Russia invaded Ukraine.
The Australian dollar strengthened as the US greenback came under pressure. The Aussie was trading at US70.72¢ at 10.17am AEDT.
On the ASX, energy stocks tumbled lower in early trade. Woodside Energy fell 3.3 per cent, Santos lost 3 per cent and Ampol slumped 1.7 per cent.
Financial stocks rose across the board after heavy losses in the previous session, with the Commonwealth Bank and National Australia Bank both up 0.8 per cent, while Westpac rose 1 per cent and ANZ Group added 0.6 per cent.
Mining stocks jumped. BHP bounced 2.5 per cent, Rio Tinto climbed 0.8 per cent and Fortescue was 0.8 per cent higher. Gold miners Northern Star (up 2.5 per cent) and Evolution Mining (up 2.8 per cent) also advanced.
Biotechnology giant CSL jumped 2.3 per cent as it outlined plans to spend $US1.5 billion ($2.1 billion) to expand manufacturing operations in the US.
Tech stocks also rebounded, with WiseTech jumping 3 per cent, Xero adding 1.3 per cent and Technology One rising 4.3 per cent.
Among aviation stocks, Air New Zealand rose 1.3 per cent despite suspending its full-year guidance because of the Middle East conflict. Qantas added 0.7 per cent and Virgin Australia advanced 2.6 per cent.
Overnight, Wall Street went on a rollercoaster ride, dropping as much as 1.5 per cent in the morning before flipping to a gain of 0.8 per cent. The Dow Jones clawed back a plunge of nearly 900 points to rise 239 points, or 0.5 per cent, while the Nasdaq composite climbed 1.4 per cent.
The whipsaw Wall Street session underscored how exposed markets remain to every development in the Middle East conflict, with a single headline enough to reverse billions of dollars in losses.
Concerns have focused in particular on the Strait of Hormuz, a narrow waterway off Iran’s coast that a fifth of the world’s oil travels through on a typical day. Iran had earlier threatened to set fire to ships in the strait. Trump said he was “thinking about taking [the Strait of Hormuz] over,” according to CBS.
If oil prices stay particularly high for long, households’ budgets already stretched by high inflation could break under the pressure. Companies, meanwhile, would see their bills rise for everything from fuel and stocking shelves to data warehouses. It raises the possibility of a worst-case scenario for the global economy, “stagflation,” where growth stagnates and inflation remains high.
The US stock market has a history of bouncing back relatively quickly from past military conflicts, as long as oil prices don’t stay too high for too long. Some professional investors continue to suggest falls in share prices could offer opportunities to buy them cheaply before they rise again.
“We continue to believe that the current acute shortage of oil will be reversed in the coming months as new supply comes online and oil should drop significantly,” according to Sameer Samana, head of global equities and real assets at Wells Fargo Investment Institute.
Even with all the recent swings in the market, the S&P 500 index that sits at the heart of many retirement accounts is still within 3 per cent of its record set in January.
To be sure, prices could reverse again in the coming days, given all the uncertainties about the war. That’s what happened through the huge swings that rocked Wall Street last week.
With AP, Bloomberg, Reuters
The Market Recap newsletter is a wrap of the day’s trading. Get it each weekday afternoon.
From our partners
Disclaimer : This story is auto aggregated by a computer programme and has not been created or edited by DOWNTHENEWS. Publisher: www.smh.com.au
