BHP, Rio slump in wild end to week for shares as war escalates in Middle East
BHP and Rio Tinto tumbled on Friday as worries emerged China is set to ramp up its pressure on Australian iron ore.
Australia’s heavyweight iron ore miners dragged the share market lower on Friday to cap a wild week of trade as investors watched the dramatic escalation of the war in the Middle East.
Near lunchtime BHP plunged as much as 5 per cent on reports China’s state-backed iron ore buyer CMRG ordered traders to avoid its iron ore, with Rio Tinto sliding 5 per cent and Fortescue Metals 3.5 per cent in sympathy.
The worries pushed the flagship S&P/ASX 200 Index down 1.2 per cent to mean it’s tracking to a 3.1 per cent loss over a week dominated by worries around soaring oil, gas and diesel prices cranking Australian and global inflation.
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By continuing you agree to our Terms and Privacy Policy.“Crude oil extended gains (overnight) as investors become increasingly concerned about a prolonged war in the Middle East,” said ANZ Bank’s economics team. “Iran launched a fresh wave of missile and drone strikes across the Gulf, with attacks reported in the UAE, Bahrain and Qatar.”
The chaos also pushed the Australian dollar around 1 per cent lower over the past week as worries around global growth were offset by rising commodity prices that benefit the local economy.
AMP’s chief economist Shane Oliver said he expects the share market damage and soaring oil prices could soon flow through to Australian households.
“A 40 cents a litre rise in petrol prices would add about 0.8 per cent to consumer price index (CPI) inflation, but it would also impart a dampening impact on growth,” he said. “This is because it would add around $14 a week to the household petrol bill leading to a cut back in spending elsewhere in the economy. In other words, it will act as a tax on households.”
Gold prices also slid overnight amid a wild week of volatility as the traditional safe-haven play was battered around by uncertainty over how the conflict with Iran will unfold.
The only bright sector on the local share market was technology led higher by a rebound in major software companies. It added 4.2 per cent across the morning, although has still crashed around 36 per cent over a horror six-month run sparked by worries about competition from AI services.
