Australian share market: Miners lead retreat as ASX200 nosedives to three-week low

The Australian share market has tumbled in early trade as nervous investors, returning from the King’s Birthday public holiday on the east coast, wait on further signs of any flare-up in tensions across the Middle East.

The S&P/ASX200 dived more than 1.5 per cent at the opening bell on Tuesday to dip below 8500 points.

The fall came despite a mild recovery on Wall Street overnight, led by gains in the Nasdaq and chipmakers as investors sought bargains after Friday’s sharp sell-off.

Investors were also relieved after Iran and Israel said they had halted attacks on each other following an appeal from US President Donald Trump that they immediately “stop shooting”.

The attacks over 24 hours were the most direct confrontation between Iran and Israel since an April ceasefire in the war.

Miners led the retreat on the local bourse, with the sector down 4 per cent after the first 30 minutes.

“A much stronger-than-expected US non-farm payrolls result on Friday unsettled financial markets, prompting investors to sharply reprice the Fed’s policy path,” Westpac Group economist Mantas Vanagas said.

Pilbara iron ore majors Fortescue and Rio Tinto had both lost 3.6 per cent while BHP plunged 3 per cent. Lithium producers Mineral Resources and IGO were also down more than 3 per cent while PLS was spared, off only 0.5 per cent.

Gold miners Perseus, Evolution and Ora Banda were among the five biggest losers of the day so far, all crashing more than 8 per cent as the precious metal held steady at $US4325 an ounce following last week’s 5 per cent rout.

“Longer term, we maintain a bullish gold view, but we believe it is extremely high-risk in the near term for anyone without very wide stops and longer-term investment horizons,” analysts from Citigroup said in a note, maintaining their six- to 12-month price target for bullion at $US5000/oz.

Woodside and Santos improved as Brent crude hovered near $US94 a barrel, still coiling within the recent fortnight’s range despite a short-lived resumption of strikes between Iran and Israel over the weekend.

Oil prices remain elevated, up more than 28 per cent since the Persian Gulf conflict began, but significantly short of recent peaks of around $US114 a barrel.

IT and telco stocks were also swept up in the selldown, with both sectors off almost 2.5 per cent.

Healthcare stocks were the clear winners, soaring 4 per cent. Consumer staples, utilities, energy and industrials also held in the green.

Positive sentiment returned after the first few hours of trade, but the index was still down 0.4 per cent at 8585 by 12.30pm AEST, but miners and IT stocks were still deep in the red.

Wall Street closes mixed

The Dow ended lower and stocks overall closed off the day’s highs overnight Monday.

Apple shares eased late and finished 1.9 per cent lower even as the company unveiled a series of AI upgrades to Siri.

“Today looks like a day where investors are doing a little bit of bargain hunting off the big tech sell-off,” said Rick Meckler, partner at Cherry Lane Investments, a family investment office in New Vernon, New Jersey.

“What normally happens after that is you get analysts coming in and reiterating buys.”

He added: “This market has been priced for quite a while for perfection, and these are certainly imperfect times. In that environment, you are going to see some back-and-forth, and some fear of prices having gone too far.”

Stocks sold off on Friday after hitting a series of record highs recently.

Underwhelming results from chipmaker Broadcom last week had raised concerns that the chip sector was growing too fast, while much stronger than expected jobs data for May contributed to Friday’s rout, as traders priced in interest rate increases this year.

The Dow Jones Industrial Average fell 80.77 points, or 0.2 per cent, to 50,786.01, the S&P500 gained 22 points, or 0.3 per cent, to 7405.73 and the Nasdaq Composite gained 220.2 points, or 0.9 per cent, to 25,929.66.

SpaceX’s initial public offering on Friday could also prove a major test for US stock markets, with investors wary of possible over-exuberance.