Australian shares are poised for a turbulent week as investors grapple with conflicting signals from the Middle East and await key economic data. Optimism surrounding a potential ceasefire between Iran and the US is countered by renewed threats of military action from US President Donald Trump, creating a climate of uncertainty. Asian markets showed tentative signs of pricing in a “peace dividend,” but analysts caution against complacency.
Stephen Innes, managing partner at SPI Asset Management, noted that while Asian equities showed gains and crude oil prices eased, the overall tone remains cautious. Brent crude oil steadied at $US109.70 a barrel. Markets are also closely watching upcoming US GDP and inflation data, which are expected to reflect the impact of rising energy prices stemming from the conflict. Investors will also be analysing minutes from the US Federal Reserve’s meeting last month.
Hugh Dive, chief investment officer at Atlas Funds Management, suggested markets may be underestimating the duration and complexity of the conflict. He anticipates a bumpy week for Australian equities, with energy and insurance sectors potentially outperforming. Ten Cap lead portfolio manager Jun Bei Liu said that businesses are examining guidance as the impact of higher fuel prices and supply disruption begins to flow through to earnings.
The S&P/ASX 200 is set to reopen on Tuesday after the Easter long weekend. Last week, the ASX 200 rose 0.7 per cent to 8579.50, marking a second consecutive weekly gain. Since the conflict began, the index has fallen 6.7 per cent, at one stage dropping more than 9 per cent and erasing over $300 billion in market capitalisation.
