Australia’s share market is falling again as oil prices head toward a worrying milestone, after the US-Iran conflict escalated to concerning new fronts overnight.
The benchmark S&P/ASX200 index was down 18.2 points by midday on Wednesday, or 0.2 per cent lower, to 8,902.6, as the broader All Ordinaries dipped by 18.6 points, or 0.23 per cent, to 9,093.2.
The fall comes after the benchmark had its worst session since early June on Tuesday, when it tumbled to six-week lows.
Brent crude is approaching $US100 a barrel for the first time since late July, rising for a fourth straight session as the war continues to spill across the Middle East amid reports of Houthi attacks on Saudi energy facilities and US launches on Iran’s Kharg Island.
“That’s weighing on market sentiment and putting downward pressure on stocks, especially cyclical sectors sensitive to growth and inflation risks brought by rising oil prices, along with non-yielding assets like precious metals,” Capital.com senior market analyst Kyle Rodda said.
Local energy stocks surged, with the sector up 1.6 per cent, led by oil and gas giants Woodside and Santos, while refinery operators Ampol and Viva Energy also lifted.
Rebounds in mega miners BHP and Rio Tinto helped boost the raw materials segment by more than one per cent after London copper futures traded at record highs for a second day.
Fortescue also advanced as iron ore futures hovered near $US100 a tonne, while precious metals sold off on fears the US Federal Reserve will hike the US funds rate next week.
The local gold sub-index dropped 1.8 per cent as the yellow metal traded at $US4,377 ($A6,063) an ounce despite the commodity clawing back some losses in early trade.
Australia’s financial sector continued to act as a barometer for the stormy economic outlook, dropping 1.3 per cent and tracking with losses in the big four banks and major insurers.
CommBank shares fell 2.3 per cent to $155.15, effectively wiping out two weeks of steady gains in the past two sessions.
Housing-market concerns continued to weigh on confidence, as hawkish comments from Reserve Bank officials on Tuesday prompted some to brace for an interest rate hike when the bank makes its next decision on September 29.
The consumer staples and discretionary spending sectors fell 0.3 and 0.5 per cent, respectively, after tumbling on soft August business and consumer confidence data.
Health care stocks underperformed the bourse, dropping 1.4 per cent, as CSL traded ex-dividend to fall to $171.19, but leaving its nearly 90 per cent rally since June largely intact.
In company news, Metcash shares dipped after the IGA and Celebrations owner flagged ongoing challenging conditions in a trading update.
Shares in shipbuilder Austal sailed almost seven per cent higher after the company confirmed a non-binding takeover offer from Wildcat Resources for its US business of up to $US1.35 billion ($A1.86 billion).
The Australian dollar was buying 72.23 US cents, up from 72.11 US cents at 5pm on Tuesday, its highest price since mid-May.
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