Aussie shares dip as Trump vows escalation before exit
Australia’s stock market fell back from its initial lead after US President Donald Trump signaled an end to the Iran conflict, but not before further tensions ensued.
“We are going to hit them extremely hard in the next two to three weeks,” Mr. Trump told Americans in his live national address.
“We will bring them back to the Stone Age, where they belong.”
The S&P/ASX200 index lost 0.55 per cent ahead of Mr Trump’s speech at noon (AEDT) on Thursday, then reversed course when it became clear he had nothing new to say.
The top 200 fell 19.2 points at the end of the address, falling 0.22 per cent to 8,653.6 by 12.20 AEDT; The broader All Ordinaries lost 30.5 points, or 0.34 percent, to 8,855.1.
The highly anticipated speech did not provide any real clarity on a US exit, but Mr Trump indicated he would turn his back on US allies dependent on oil from the Strait of Hormuz.
The strait, a transit point for a fifth of global oil and 60 percent of Asia’s oil supply, has been effectively blockaded by Iran since the United States and Israel began bombing the Islamic republic in late February.
“Countries around the world that receive oil from the Strait of Hormuz are taking care of this transition… leading the way in protecting the oil on which they are so desperately dependent,” Mr. Trump said.
Domestic energy stocks sold off ahead of Mr Trump’s speech but later recovered as Brent crude rose from US$100 a barrel to US$105.70 in midday trading.
Oil and gas giants Woodside and Santos were down more than five and three percent, respectively, on Thursday morning but narrowed their losses in the wake of Mr. Trump.
Ampol and Viva Energy, which operate Australia’s two remaining fuel refineries, have also broken ground.
Before the speech, real estate stocks were outperforming the stock market after falling more than 15 percent since December following three interest rate hikes by the Federal Reserve in as many meetings.
Prime Minister Anthony Albanese gave a national address on Wednesday night to encourage Australians to think of others when filling up their fuel tanks, but stopped short of signaling fuel rationing will be rationed despite uncertainty over national supply from May.
Coal miners were also sold off, while uranium stocks had no clear direction.
ASX-listed gold miners have been hit after a positive start, with the precious metal falling from US$4,770 per ounce ($A6,926) to US$4,662.
Northern Star shares fell 0.2 percent after it said it was on track to meet twice-reduced production targets and announced a market share buyback of up to $500 million.
The Trump administration is reportedly preparing to reshape the steel and aluminum tariff regime, according to The Wall Street Journal.
It was stated that the USA will impose a 50 percent tax on commodity class products, while a 25 percent tax will be applied to final products made of imported steel or aluminum.
Shares of aluminum producer Alcoa rose nearly five percent, while BlueScope Steel rose just 0.3 percent to $26.47.
Australia’s heavyweight financial sector looked encouraging in early trading, then eased back to a 0.3 per cent gain as the lead of the big four banks faded.
Stock exchange operator ASX has gained more than two per cent despite the corporate regulator’s final report on the group finding failures in governance and market systems.
“The market and the Australian public need a resilient and reliable market infrastructure,” ASIC chairman Joe Longo said.
“It is now absolutely up to the ASX to ensure its transformation is successful and permanent.”
On the other hand, more than half of its market value was wiped out after clothing and footwear company KMD Brands lifted its trading halt after completing the corporate component of its emergency capital raise.
The Australian dollar bought 68.89 US cents after falling from 69.05 US cents at 5pm on Wednesday following Mr Trump’s speech.
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