Middle East conflict intensifies, causing investor unease, as Australian stock market remains stationary
In the wee hours of Wednesday, Australian shares showed a subdued performance, as investors found themselves treading cautiously amid the intensifying conflict in the Middle East. The escalating tensions between Iran and Israel have been escalating for six days now, with alarming reports indicating that the US military is deploying more fighter aircraft to the region.
The S&P/ASX 200 index dipped by 0.1% to 8,530.60 at 0032 GMT. The index had already lost 0.1% on the previous trading day.
Energy stocks took the lead, inching up 0.6%, mirroring a more than 4% surge in oil prices on Tuesday due to the escalating Israel-Iran conflict raising concerns about potential supply disruptions. Woodside Energy rose 0.8% and Santos gained a similar percentage, fuelled by the instability in the Middle East.
Export-dependent healthcare stocks also showed growth, buoyed by a higher US dollar. CSL advanced 1.5%, leading the sector's charge.
IT stocks added 1.2%, with WiseTech Global rising 1.6% and NEXTDC experiencing a 1.0% dip after agreeing to a A$2.2 billion ($1.43 billion) debt facility.
Conversely, heavyweight miners suffered a 1.1% loss, with the sector's sub-index hitting its lowest level since May 9, as copper prices fell due to the Middle East instability. BHP Group declined by 1.2%, and iron ore miner Rio Tinto slid 0.5%.
Financials remained relatively steady, with the country's "Big Four" banks losing between 0.1% and 1%. Gold stocks suffered a 0.8% drop, as investors sold off gold to cut their exposure to the ongoing conflict. Gold miner Northern Star Resources fell 1.3%.
In New Zealand, the S&P/NZX 50 index remained largely stable, hovering at 12,639.95.
During times of Middle East instability, energy stocks often fare better due to increased oil prices and supply concerns. However, broader market confidence, including the S&P/ASX 200 index, may be affected by global economic uncertainty triggered by geopolitical tensions. Prolonged instability may also increase shipping insurance premiums and operational costs, impacting trade-linked and energy-related companies.
- In the current market, energy stocks like Woodside Energy and Santos have inched up due to the Middle East instability, reflecting a more than 4% surge in oil prices.
- CSL, a significant player in the healthcare sector, advanced 1.5% on the back of a higher US dollar.
- IT stocks, such as WiseTech Global and NEXTDC, experienced varying movements, with WiseTech Global rising 1.6% and NEXTDC experiencing a 1.0% dip following a A$2.2 billion debt facility agreement.
- Contrarily, heavyweight miners, including BHP Group and iron ore miner Rio Tinto, suffered a 1.1% loss, with the sector's sub-index hitting its lowest level since May 9, as copper prices dropped due to the Middle East instability.
- Gold stocks, such as gold miner Northern Star Resources, suffered a 0.8% drop as investors sold off gold to cut their exposure to the ongoing conflict in the Middle East. Despite this, the finance industry, including the country's "Big Four" banks, remained relatively steady, with minimal losses.
