Aussie shares tumble as bonds sell-off and oil soars
Australian shares started the week sharply lower as oil prices rose due to the ongoing Iran conflict and inflation raised fears that global central banks would be forced to raise interest rates.
The S&P/ASX200 fell 110.1 points at midday trading, down 1.28 per cent to 8,520.7 points, while the broader All Ordinaries fell 118.9 points, or 1.41 per cent, to 8,745.8 points.
The slide comes after Wall Street’s gravity-defying, record-breaking performance lost steam on Friday; Gains from the previous two sessions were erased as AI hype and strong tech gains collided with worsening inflation concerns.
“Risk sentiment took a hit at the end of last week as nerves around the conflict in the Middle East and its inflationary implications re-emerged,” Westpac economist Ryan Wells said.
“The global bond rout has caused long-term yields to jump to new highs in some regions as markets now anticipate tighter monetary policy sooner.”
Energy stocks were the only local sector to rise Monday morning; Santos and Woodside rose more than two percent as Brent crude rose above $111 for the first time in two weeks.
Refinery operators Viva and Ampol also improved; The rise in crude oil prices following reports that a drone strike sparked a fire at a nuclear power plant in the United Arab Emirates and as U.S.-Israeli efforts to end the war against Iran appear to have stalled.
The basic materials sector remains under heavy pressure after last week’s spectacular rally; megaminers BHP, Rio Tinto and Fortescue each lost 2.4 percent or more.
Gold miners were in a sea of red as the precious metal fell to US$4,535 ($A6,360) an ounce and the All Ordinaries gold sub-index fell four per cent.
Lithium miners Liontown and PLS bucked the trend with small gains, while Lynas Rare Earths rose more than five percent.
Financials were eased by a mixed performance from the big four banks, with CommBank and Westpac making small advances and ANZ and NAB lagging behind.
Consumer-facing stocks also sold off; Staple and cyclical stocks lost about 0.8 percent each.
Real estate trusts underperformed the stock market; The segment declined 2.5 percent as the domestic economic outlook continued to deteriorate.
Santos has delivered first oil from its Pikka project in Alaska and is targeting an 80,000-barrel production plateau in the third quarter, according to company news.
Shares in agribusiness giant Elders have fallen by almost a quarter despite reporting a first-half statutory net profit of $39.5 million, warning of the impact of fuel prices on the sector.
The Australian dollar is buying 71.27 US cents from 71.59 US cents at 5pm on Friday, easing from its recent rally as investors think global central banks are trying to catch up with the already hawkish RBA.
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