Escalating geopolitical tension in the Middle East, triggered by new United States military strikes on multiple Iranian targets, has roiled Australian financial markets, driving a sharp jump in global crude oil prices and pulling Australia’s benchmark stock index lower on Thursday as investors braced for potential further conflict.
The Australian Securities Exchange’s benchmark S&P/ASX 200 closed down 20.10 points, or 0.23%, at 8633.20, while the broader All Ordinaries index dropped by an identical 0.23% to settle at 8836.70, shedding 20.3 points. Against this broad market downturn, only four of the exchange’s 11 major industry sectors finished the trading session in negative territory, with losses in technology and large banking stocks offsetting gains for energy and healthcare equities. The Australian dollar bucked the downward trend, edging 0.14% higher to trade at 70.03 U.S. cents by market close.
Tech stocks led the declines across the market. Leading accounting software firm Xero fell 3.58% to close at AU$74.07, logistics technology firm WiseTech Global dropped an additional 2.79% to AU$36.99, and data center operator NextDC plunged 4.23% to AU$14.50. The country’s four largest banking giants also weighed heavily on the benchmark index: Commonwealth Bank of Australia slipped 2.38% to AU$156.42, Westpac fell 2.57% to AU$34.50, while both National Australia Bank and ANZ Group dropped 1.79% to AU$35.68 and AU$33.80 respectively.
The price surge in crude oil came as a direct response to the new U.S. military strikes, compounded by Iranian reports that it had intercepted two commercial vessels attempting to transit the Strait of Hormuz, a critical chokepoint that carries roughly a fifth of the world’s daily oil supply. By the close of Australian trading on Thursday, Brent crude had risen to $US94.08, equal to around AU$134 per barrel.
Tony Sycamore, a market analyst at IG Group, noted that oil market volatility has remained muted so far, for three key reasons. First, he highlighted that former U.S. President Donald Trump has a well-documented pattern of stepping back from full escalation at the last moment. Second, any large-scale direct U.S. attack on Iran carries significant risk of Iranian retaliation targeting vulnerable energy infrastructure along the Persian Gulf, which would send global oil prices skyrocketing. Finally, Sycamore pointed out that Trump recently highlighted ongoing U.S. military escort operations that have already moved more than 100 million barrels of non-Iranian oil safely out of the region, keeping critical supply flowing through the strategic waterway.
Even with relatively contained volatility in oil futures, Australian energy producers posted clear gains on the back of higher crude prices. Top Australian liquefied natural gas exporter Woodside Energy climbed 1.55% to AU$31.52, upstream oil and gas producer Santos rose 2.02% to AU$8.07, and fuel retailer Ampol added 0.30% to close at AU$36.77.
Healthcare stocks emerged as another bright spot in an otherwise soft trading session. Biotech giant CSL rallied 4.16% to AU$107.23, medical imaging firm Pro Medicus gained 0.75% to AU$162.79, and medical device manufacturer Fisher & Paykel Healthcare closed up 0.22% at AU$31.77.
Beyond the two outperforming sectors, several individual stocks posted notable moves. Retail chain operator Super Retail Group gained 0.73% to AU$12.35 after its annual shareholder day unveiled a new five-year strategic growth plan, which includes adding 110 new store locations to expand its national footprint to 900 stores, with a focus on under-served regional areas and expanding the product range of its discount auto brand Super Cheap Auto.
In contrast, Southern Cross Media Group saw its shares slump 4.24% to AU$0.56 after parent company Seven West Media announced plans to cut between 250 and 300 full-time positions across its assets, which include the Seven television network, The West Australian newspaper and Southern Cross Austereo. The restructuring is aimed at delivering annual cost savings of between AU$145 million and AU$150 million.
Infrastructure developer Lendlease was one of the day’s top large-cap gainers, jumping 4.58% to AU$2.74 after the firm announced that Nick O’Neil will take over as chief executive officer, while also reaffirming its full-year earnings guidance of 28 to 34 cents per share across its investment, development and construction divisions.