ASX Today Live News & Analysis

Australian shares fell sharply after reports that Iran had attacked two oil tankers in Iraqi waters, dampening hopes of de-escalation in the region and pushing crude oil prices significantly higher.

The S&P/ASX200 dropped 114.5 points on Thursday, falling 1.31 percent to 8,629. This decline erased nearly all the gains made over the previous two sessions, leaving only about 30 points intact. The broader All Ordinaries index also declined, losing 125.4 points, or 1.4 percent, to close at 8,851.4. The drop wiped roughly $42.6 billion from the market's combined value of about $3.05 trillion.

Crude oil prices surged more than six percent during the trading session. Efforts by the International Energy Agency (IEA) to calm markets by planning the release of millions of barrels of oil failed to ease concerns after Iran reportedly struck two oil tankers in the Strait of Hormuz.

Kylie Purcell, senior market analyst at Stake, said the IEA had ordered the release of 400 million barrels of oil, marking the largest release on record as tensions in the Middle East reach a critical point. She added that while releases from strategic reserves can help stabilize prices in the short term, oil futures will ultimately depend on whether supply routes through the Middle East return to normal.

Among market sectors, only energy stocks ended the session higher, while banks and mining companies experienced widespread selling. Woodside shares rose more than two percent to $31.05, while Santos also recorded gains. Coal miners Yancoal and Whitehaven surged strongly and outperformed most companies in the top 200.

The rise in energy stocks came as Energy Minister Chris Bowen announced plans to temporarily ease fuel quality standards. The changes would allow higher sulphur levels in fuel for the next 60 days, with the aim of increasing supply by around 100 million litres of fuel per month.

In contrast, mining stocks declined. BHP led the sector lower, with the iron ore giant falling 1.9 percent. Other industrial metals producers also slipped as investors assessed the potential impact of the energy shock on the global economic outlook.

Gold stocks also dropped as the price of gold eased to $5,153 per ounce (about $7,230 in Australian dollars). The precious metal weakened as investors shifted toward the US dollar as a safe-haven currency.

One exception in the gold sector was Ora Banda, which initially rose following encouraging drilling results, although it surrendered a significant portion of those gains by the end of the trading session. Lynas Rare Earths was another standout performer, rising for a second consecutive day after securing a price floor in a 12-year supply contract extension with a Japanese buyer.

The heavyweight financial sector also declined, dropping 1.5 percent as all four major banks traded lower. However, insurance companies IAG and Suncorp managed to edge higher despite the broader sector downturn.

Interest rate-sensitive sectors, particularly information technology and real estate stocks, were hit especially hard. Many economists and analysts are preparing for the possibility that the Reserve Bank may raise interest rates at its meeting next week.

Anthony Malouf, a market analyst at Ebury, noted that while the Reserve Bank would typically look past the direct inflationary effects of an oil shock, policymakers would be cautious about the risk of higher inflation expectations becoming entrenched. He said the oil price surge comes at a difficult time for the central bank, which had already forecast inflation remaining outside its target range until mid-2027.

Despite these concerns, Ebury expects the Reserve Bank to keep interest rates unchanged at next week's meeting while it waits for additional economic data to guide its future decisions on borrowing costs.

Meanwhile, the Australian dollar weakened against the US dollar. It was trading at 71.22 US cents, down from 71.74 US cents the previous day at 5 p.m., as investors moved funds into the US dollar amid rising geopolitical tensions.

On the ASX,

The S&P/ASX200 closed down 114.5 points, or 1.31 percent, at 8,629.

The broader All Ordinaries index fell 125.4 points, or 1.4 percent, to 8,851.4.

The NZX 50 Lost -93.84 points (-0.71%) to 13,199.29 while the Nikkei dropped -572.41 points (-1.05%) at the time of writing, to be closed at 54,452.96

Companies commencing Ex-Dividend Trading Today (ASX 300):

AUB Group Limited

Australian Clinical Labs Limited

Endeavour Group Limited

Inghams Group Limited

Kogan.com Ltd

McMillan Shakespeare Limited

Perpetual Limited

Regis Healthcare Limited

Regis Resources Limited

SRG Global Limited

Super Retail Group Limited

Viva Energy Group Limited