Global sharemarkets are experiencing a robust resurgence, even as the Middle East conflict continues and Brent crude oil prices top US$106 per barrel. However, Australia’s benchmark S&P/ASX 200 stands as a notable exception, recently falling for a fourth consecutive day and remaining five per cent below its late February record high. While the index has gained approximately three per cent this month, recovering from initial shocks, this modest movement pales in comparison to significant advances seen across other major international bourses.
A confluence of factors is currently weighing on the local market. These include the Reserve Bank of Australia’s ongoing rate-raising cycle, the nation’s high vulnerability to the global fuel crisis exacerbated by the Iran war, and a series of profit downgrades from major companies. Hearing implant maker Cochlear, which designs, manufactures, and supplies implantable hearing solutions, issued an earnings shocker this week, triggering a 40 per cent share price plunge. Other ASX-listed entities, including Qantas and Worley, have warned of surging energy prices impacting their bottom lines. UBS Global Markets executive director Rob Taubman observed a “broad-based downgrading cycle across multiple sectors.”
In stark contrast to the ASX 200’s modest recovery, the S&P 500 has climbed 8.9 per cent month-to-date, the Nasdaq surged 13.2 per cent, and Japan’s sharemarket increased 16.5 per cent. Alphinity Investment Management client portfolio manager Elfreda Jonker highlighted that Australia, as a net importer of liquid fuels with limited refining capacity and inadequate strategic reserves, has been particularly hurt by the conflict-driven oil price spike. She noted Japan and South Korea mitigated risks through better strategic reserves or a memory-chip supercycle. The ASX healthcare sector is the worst performing locally, while the heavy weighting of bank stocks also contributed to the ASX’s underperformance, ahead of anticipated inflation figures.
