Weekly wrap: Tehran explosions send market lower as gold and oil prices fly
The Australian share market was set for a rise on Friday until explosions in nuclear facilities near Iran’s capital Tehran sent everything into reverse other than energy and gold stocks.
The Israeli strike quickly sent the ASX 200 scurrying into reverse after it had opened higher, with the index falling 17.7 points or 0.2% to close at 8547.4 points on Friday.
Even with that reversal, the index still managed a 0.4% rise for the week, leaving it poised to either resume a march into greater record territory or retrace some prior levels.
It marked an explosive end to a mainly positive week in which the index hit record highs and the US market was also closing in on its record high as investors grew more confident that US President Donald Trump was moving past tariff issues and concentrating instead on enforcing law and order as his big crackdown on illegal immigrants fanned out amid fierce demonstrations in various states.
The big exception to the sudden drops across the board were energy and gold shares which boomed on the back of new global uncertainty.
Oil prices soared by as much as 13%, sending shares in sector leader Woodside (ASX: WDS) up by 7.4% to $25.21 and Santos shares (ASX: STO) up 3.7% to $6.96.
Gold mining shares joined the uncertainty trade, with Newmont (ASX: NEM) shares up 5.8%, Evolution shares (ASX: EVN) up 5.5% and Northern Star Resources shares (ASX: NST) up 5.1%.
Banks and miners mostly weaker
Just about everywhere else you looked the previous bullish moves backtracked into losses, starting with the big miners as Rio Tinto shares (ASX: RIO) fell 1.1% and BHP shares (ASX: BHP) fell 2.6%, although Fortescue shares (ASX: FMG) bucked the trend and rose 0.5%,.
At the other end of the ASX large company dumbbell, the big banks were also mostly weaker, led down by sector leader Commonwealth Bank shares (ASX: CBA) down 0.7%, Westpac shares (ASX: WBC) up 1c or a tiny 0.03%, ANZ shares (ASX: ANZ) down 0.5% and National Australia Bank shares (ASX: NAB) down 0.3%.
Corporate news leads to slumps
Some stocks were reacting to corporate news, one being online luxury retailer Cettire (ASX: CTT) which extended its decline, dropping another 20.3% to 26¢ on Friday after crunching 31.2% on Thursday on the back of its second profit downgrade in less than two months.
Shares in footwear retailer Accent (ASX: AX1), which owns the Hype and Platypus chains and fashion outlet Glue Store, tripped and fell 24.7% to $1.36 after warning that sales have flagged since Christmas.
Another company to feel the wrath of the market was Dalrymple Bay Infrastructure (ASX: DBI) which fell 6.2% to $3.79 after North American giant Brookfield Infrastructure confirmed it has divested its 23.2% stake in the Queensland coal port.
The week ahead
Other than waiting to see what happens in the Middle East and with US tariffs, the main economic news will continue to centre around global interest rates.
The US Federal Reserve meeting on Wednesday is tipped to hold official rates steady at a range of 4.25% to 4.5%, although there was some better news on the bond market in the past week as the yield on the 10-year Treasury fell to 4.35% from 4.41%.
Triple central bank action
Weaker than expected US inflation numbers at a wholesale and consumer level also make an interest rate cut more likely but most analysts think the Fed will hold fire as it waits to see the inflationary effect of President Trump’s tariff policies.
The Bank of Japan and the Bank of England are both also expected to hold interest rates steady in the coming week, although there may be an announcement from the BOJ about slowing the pace of cuts in bond purchases.
Here in Australia the main interest will be in job market figures out on Thursday which are expected to show that the economy added 20,000 jobs in May, with the unemployment rate set to stay steady at 4.1%.