ASX slides after fresh US strikes on Iran and a choppy session on Wall Street

The Australian sharemarket declined in early trade after US forces carried out new airstrikes on Iran, with a resolution to the war that began nearly three months ago remaining elusive despite recent optimism.

The S&P/ASX 200 dropped 57.60 points, or 0.7 per cent, to 8660.10 as of 11.15 am AEST, with all sectors declining bar consumer stocks. The sell-off wiped out the market’s gains from the previous session, when the ASX added 0.7 per cent after data showing lower-than-expected inflation in April sparked hopes the Reserve Bank won’t raise interest rates again month. The Australian dollar was trading at US71.30¢, down 0.2 per cent.

A US official said the latest attacks were defensive, and America intends to maintain the existing ceasefire. Central Command forces shot down a quartet of one-way Iranian attack drones that were fired at a commercial ship, and also struck another Iranian drone launching unit in Bandar Abbas, near the strait, he said.

Hours earlier, President Donald Trump said he was “not satisfied” in negotiations with Iran, damping expectations for an imminent breakthrough. The White House also dismissed an Iranian report about a draft interim peace deal that would see traffic through the Strait of Hormuz return to normal within a month as “complete fabrication.” US Secretary of State Marco Rubio said that “we’ll see over the next few hours and days whether progress could be made” on Iran.

The early market losses were led by the key financial and mining sectors, which combined account for close to 60 per cent of the entire ASX. The big four banks were all in the red, with CBA down 0.7 per cent, while Westpac, National Australia Bank and ANZ Bank were all down 0.9 per cent. Embattled exchange operator ASX Ltd fell for a third day, slumping another 3.7 per cent.

Of the mining heavyweights, BHP slipped 0.7 per cent, Rio Tinto fell 2.1 per cent and Fortescue Metals shed 1.3 per cent. Precious metals producers were also sold down, with gold miners Northern Star Resources down 3.2 per cent, Evolution Mining falling 2.9 per cent and Newmont slumping 4.6 per cent as gold held a two-day drop, with the lack of progress in peace talks continuing to pressure interest rates. Bullion traded around $US4,450 an ounce, after sliding 2.6 per cent in the prior two sessions. South32, which owns Australia’s biggest silver mine, fell 1.9 per cent.

IT stocks gave back their gains from Wednesday. Software makers Xero (down 1.2 per cent), WiseTech Global (down 0.8 per cent) and Technology One (down 1.5 per cent) were all trading lower after US enterprise software giant Salesforce gave a disappointing sales outlook, unnerving investors already concerned about the possibility that artificial intelligence will disrupt the industry.

Energy stock also edged lower after oil prices dropped more than 5 per cent on Wednesday, with oil and gas giants Woodside and Santos down 0.6 per cent and 0.4 per cent, respectively, while refiner Ampol inched up 0.1 per cent. However, oil prices went up again after the reports of the latest airstrikes. Brent rose above $US96 a barrel, while West Texas Intermediate was near $US90.

On Wall Street overnight, US stocks ended their Wednesday session roughly where they started, as investors took profits in tech names but remained optimistic that an end to the war in the Middle East was near.

The S&P 500 Index closed little changed. The tech-heavy Nasdaq 100 Index was down 0.1 per cent, while the Dow Jones Industrial Average advanced 0.4 per cent.

While the choppy session didn’t produce large moves in the S&P 500, “there was a lot of movement beneath the surface,” said Adam Crisafulli, founder of Vital Knowledge. He noted Wednesday’s drop in oil prices weighed on energy stocks and “investors booked profits in certain white-hot tech names,” including Nvidia.

Stocks of companies with big fuel bills helped lead the way on hopes that lower oil prices will remove a big drag on their profits. Norwegian Cruise Line Holdings climbed 6.1 per cent, and United Airlines rallied 6.3 per cent. Delta Air Lines rose 3 per cent and set an all-time high.

Stocks have been able to run to records despite the painful inflation and uncertainty caused by high oil prices largely because companies have reported surprisingly strong profits for the start of 2026, and the forecast is for them to continue.

Bath & Body Works rallied 9.7 per cent, and Abercrombie & Fitch climbed 8.9 per cent after both reported bigger profit for the latest quarter than analysts expected. That’s even as US consumers continue to say they’re feeling discouraged about the economy and inflation.

Lululemon Athletica rose 2.9 per cent after reaching a deal with its founder, Chip Wilson, where it will add a former chief marketing officer of ESPN and a former co-CEO of On to its board of directors.

On the losing side of Wall Street was Dick’s Sporting Goods, which dropped 6 per cent despite delivering a profit for the latest quarter that edged past expectations. Analysts pointed to how much profit it wrung out of each dollar in revenue, which some called a bit weak.

Oil-and-gas stocks also sank, hurt by the dropping prices for crude. Exxon Mobil fell 1.3 per cent, and Chevron slipped 1.3 per cent. Halliburton dropped 3.6 per cent to bring its gain for the year so far back toward 40 per cent.

In the bond market, Treasury yields eased after falling oil prices took pressure off inflation. The yield on the 10-year Treasury slipped to 4.48 per cent from 4.50 per cent late Tuesday and from 4.67 per cent roughly a week ago.

It’s a respite following recent gains for yields in bond markets worldwide, which threatened to slow economies and undercut prices for stocks and all kinds of other investments. High yields have already forced the average long-term US mortgage rate to its most expensive level since last summer, and they could curtail companies’ borrowing to build the artificial-intelligence data centres that have supported the US economy’s growth recently.

In stock markets abroad, indexes were mixed in Europe.

with AP, Bloomberg

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