Australian shares continued to soften after US President Donald Trump talked tough about Iran even as he raised hopes of a deal for “everlasting” peace in the troubled region.
Investors focused more on his orders to “shoot and kill” any mine-laying boats in the Strait of Hormuz and the grabbing of an Iran-linked tanker by the US Navy.
The ASX 200 index reacted with a fall of 6.9 points, or 0.08%, to 8786.50 points to end the week down 1.79%.
Australia well off the pace
The four days of falls for Australian shares contrasts sharply with rises in other global exchanges with Wall Street futures still pointing up on Friday and most Asian bourses also higher for the week.
Crude oil prices have also been rising as the standoff in the Strait of Hormuz continues, with Brent crude up 1.23% to $US106.30 a barrel overnight and West Texas Intermediate up 0.97% in Asian markets, rising to $US96.82.
Energy stocks higher
That led to some of the best gains on the ASX being in the energy and utilities sectors, which both firmed by more than 1% as stocks including Woodside (ASX: WDS) and Santos (ASX: STO) jumped by 2.64% and 1.04% respectively.
Much of the weakness on the ASX 200 was based on specific stocks that disappointed such as Cochlear, with health care and financials generally weaker.
Lithium on the nose
On Friday one of the highest profile losers was critical resources miner IGO (ASX: IGO), with its shares down 17.92% to close at $7.01 after the company posted disappointing quarterly production and sales volumes.
IGO also cut production guidance for its Greenbushes operation which is the world’s largest hard-rock lithium mine.
Healthcare searching for a cure
Healthcare continued to be a weak spot in Australia, with the sector losing an amazing 6.54% for the week. Cochlear shares (ASX: COH) recovered slightly from its precipitous 40% drop earlier in the week after a shock earnings downgrade and closed up 2.47% to $97.35. CSL shares (ASX: CSL) rose 0.78% to $130 on Friday, but the company is still plumbing share price depths not seen since 2017.
The big banks and other financials finished the week down 2.92% with big tests in coming weeks with the inflation numbers which are expected to feed into another interest rate rise.
Australia’s big miners didn’t come to the rescue either, with the materials sector down 1.01% on Friday to finish the week down 2.08%.
Tech flat but Suncorp rises
Technology stocks were basically flat for the week with shares in WiseTech Global (ASX: WTC) and Xero (ASX: XRO) overcoming early losses to rise by 0.14% and 0.3% respectively on Friday. Shares in NextDC (ASX: NXT) added 1.36% after another successful debt raise in the bond market. There was some good news around with shares in Suncorp (ASX: SUN) jumping 4.47% to $17.05 after announcing the purchase of a five-year aggregate reinsurance cover.
It also said it expected gross written premiums to grow by 3%. Infrastructure real estate company DigiCo (ASX: DGT) rose an impressive 6.94% to $2.31 and cloud services company Data#3 (ASX: DTL) saw its shares rise 5.81% to $8.01 after the release of positive broking reports. Not so lucky were shareholders in iron ore giant Fortescue (ASX: FMG) who saw their shares lose 5.67% to $19.78 after it announced an additional $1 billion investment in green energy infrastructure.
The week ahead
Once again markets will be captive to developments in the the war in Iran in the coming week, with toughening rhetoric from both sides adding a note of caution despite ceasefire extensions.
However, attention will also shift to US corporate earnings which have been surprisingly robust in the face of the war.
Magnificent Seven results will provide market direction
Some members of the Magnificent Seven are also reporting, which will be a vital trigger for market direction.
Alphabet, Amazon, Meta, Microsoft and Apple are likely to add to a picture of earnings resilience in the US, with consensus estimates for S&P 500 for the first quarter up 1.3% year-on-year, and up 18% year on year for the 2026 calendar year.
There are plenty of theories about why US businesses have been so resilient during this crisis, with the most common centring on the US now being a net exporter of oil, instead of a heavily impacted net importer during previous oil crises.
Australian companies, in contrast, have been surprising investors with many profit downgrades, the most recent being Cochlear’s ominous warning of looming poor profits and sales, which sparked a very sharp 40% negative market reaction for the former investor darling.
Some of the major US companies reporting earnings in the coming week include Visa, Coca-Cola, S&P Global, UPS, Hilton, General Motors, Spotify, Starbucks, Alphabet, Amazon, Meta, Microsoft, General Dynamics, ADP, Ford, Apple, Eli Lilly, Mastercard, Caterpillar, Merck, ConocoPhillips, SanDisk, Bristol-Myer, Exxon Mobil, Chevron, Aon, Colgate-Palmolive, Cboe, Moderna and Estee Lauder.
Fed decision looks like a hold
Also of interest in the US will be the Federal Reserve’s interest rate decision, which most pundits think will hold steady at the current target range of 3.5-3.75%.
In Australia, the main economic release of interest is the consumer price index for March which is out on Wednesday, with market consensus being a monthly jump of 1.1% to an annual rate of 4.6%.
The quarterly trimmed mean CPI, which the Reserve Bank frequently uses to determine interest rate policy, is expected to increase by 0.9% for the quarter, with its annual rate rising to 3.5%.
These numbers will heavily influence the next RBA rate decision on 5 May, with market movements now pointing to a 72% chance of a 25-basis point rate hike being announced.
Australian companies announcing earnings updates include Woodside, Woolworths, Mineral Resources, Origin Energy, ResMed and ANZ.
