The Australian sharemarket experienced a significant downturn on Friday, driven by escalating conflict in the Middle East and the potential for sustained disruptions to energy markets. The S&P/ASX 200 Index fell by 113.6 points, or 1.3 per cent, to 8826.7, bringing weekly losses to approximately 4.1 per cent and erasing February’s gains. This marks the benchmark’s worst week since May 2022, when the Reserve Bank of Australia (RBA) implemented a surprise interest rate hike.
Concerns over rising oil prices and their impact on inflation have prompted bond markets to factor in more than two RBA rate rises by the end of the year. Capital.com senior market analyst Kyle Rodda noted that markets are now pricing in a potential price shock from oil, diminishing hopes for further US rate cuts and altering the swaps curve in the Eurozone. Rodda warned of the rising risk of an ongoing supply shock that could heavily disrupt energy markets, leading to higher inflation and weaker economic growth.
Despite the overall market decline, some energy stocks saw gains. Woodside Energy rose 0.8 per cent, Santos by 1 per cent, and Viva Energy by 2.7 per cent. Conversely, iron ore miners faced headwinds after China’s state-backed iron ore buyer urged traders to cease purchasing new BHP cargoes for resale. Consequently, BHP dropped 4.5 per cent, Rio Tinto 4.5 per cent, and Fortescue 1.1 per cent. Investors continued to favour tech stocks, with WiseTech Global, a logistics software company, up 7.7 per cent and Xero, a cloud-based accounting software provider, climbing 5.4 per cent.
In other corporate news, Magellan Financial, an Australian-based global asset management company, soared 8.3 per cent after the Lowy Family acquired a 5.1 per cent stake. SkyCity Entertainment, a gaming and entertainment company, fell 3.5 per cent as it faces potential class action proceedings over its online casino operations in New Zealand, which the company denies liability for. Uranium miner Deep Yellow reported a widened half-year loss of $7.78 million, causing its shares to drop 11 per cent.
