The Australian sharemarket experienced a significant downturn on Monday, erasing nearly $120 billion in value as escalating tensions in the Middle East sent oil prices soaring. The S&P/ASX 200 Index fell 3.6 per cent, or 317.70 points, to 8535, tracking its biggest one-day loss since April of last year. The surge in oil prices, nearing $US120 a barrel, triggered widespread equity sell-offs across the Asia-Pacific region, with concerns rising that the conflict could reignite inflation, harm global growth, and prompt central banks to raise interest rates further.
Crude oil prices surged as much as 28 per cent before settling to a 23.4 per cent increase at $US116.05, marking its highest level since the Russia-Ukraine conflict in 2022. The disruption to the Strait of Hormuz, a critical shipping lane for approximately a fifth of the world’s crude oil, has exacerbated market jitters. Adding to investor concerns was the uncertainty surrounding the succession of Iran’s supreme leader.
Energy stocks were among the few gainers on the ASX, with Woodside, Karoon Energy, Santos, and Beach Energy all recording increases. Santos is an Australian energy company. Beach Energy is an oil and gas exploration and production company. Coal miners also surged as markets anticipated alternative supplies. However, materials, financials, and interest-rate-sensitive sectors such as property and retail faced heavy losses, with major banks and companies like BHP, Rio Tinto, and Fortescue all declining significantly.
In corporate news, Domino’s Pizza Enterprises saw a slight dip despite its chairman increasing his stake in the company. Elsewhere, Dyno Nobel tumbled after selling its Phosphate Hill fertiliser business to Mayfair Australia, while Pro Medicus slid despite securing two five-year contract renewals in the US. Amplitude Energy gained following promising results from its Isabella sidetrack well in Victoria.
