Australian share market: Oil price gains and tanker attacks drive ASX200 back deep in the red

Investor nerves over just how long the US-Israeli war with Iran will last and growing fears over global oil supply is driving the Australian share market back deep into the red.

After two days of gains that came close to wiping out Monday’s near $100 billion bloodbath, the S&P/ASX200 dived 1.3 per cent to 8629.2 in the first 45 minutes of trade on Thursday as investors digested overnight news of further attacks on oil tankers passing through the Strait of Hormuz and Irani drones hitting an apartment block and the international airport in Dubai.

It was little changed mid-way through the session, reaching 8632.4 by 12.45pm AEDT.

An emergency decision by the International Energy Agency’s to release 400 million barrels of oil from its strategic reserves failed to allay fears at home that Australia’s supplies were at risk.

It was also revealed that Australia’s top fuel suppliers have halted spot sales as supply tightens amid the disruptions.

The Australian Institute of Petroleum members — that together supply about 85 per cent of the nation’s liquid fuels — will prioritise their regular customers and cease spot sales.

Average prices at the bowser have soared 20 per cent in the past month, with some service stations selling a litre of unleaded for more than $2.40.

Donald Trump’s comments that the war was done but a warning that the US would not “leave early” pushed oil prices higher for a second day, with West Texas Intermediate climbing as much as 6.6 per cent to $US93.01 a barrel after adding almost 5 per cent on Wednesday.

Iran told regional intermediaries that any ceasefire would require the US to guarantee that neither it nor Israel would strike the country in the future. Washington is unlikely to accept those terms, further dimming already fading expectations that the war will end soon.

Miners managed to eke out a 2 per cent gain on the local bourse, with Ora Banda Mining (up 21.5 per cent), Lynas Rare Earths (up 16.2 per cent), Iluka Resources (up 9.4 per cent) and Champion Iron (up 6.9 per cent) the top-four performers.

There were marginal gains for banking, energy and consumer staples stocks, but the other seven sectors tumbled back into the red.

Block out the noise

Schroders’ head of Australian equities Martin Conlon said geopolitical uncertainty, commodity price fluctuations and structural changes in market participation are contributing to heightened volatility.

But investors needed to ignore the noise and stay focused on durable businesses and rational valuations.

“There are a number of factors creating uncertainty for investors right now, including geopolitical tensions and movements in oil and commodity prices,” he said.

“Panic is never a good sentiment for investment. If investors are thinking about the sustainable earnings of a company and whether they are paying a sensible price for it, they should generally be OK. The key is to remain rational and focus on fundamentals.”

US stocks end lower as Iran war sours risk appetite

US stocks closed lower as markets largely looked past a tame inflation report, focusing instead on intensifying hostilities and mounting repercussions related to the US-Israeli war on Iran.

Iran continued to attack ships in the blockaded Strait of Hormuz, but OPEC assured markets that Saudi Arabia had ramped up production.

The Dow logged the steepest percentage drop among the three major US equity indexes, while chip manufacturers lifted the tech-heavy Nasdaq to a marginal, late-session gain.

“In such an uncertain environment, the markets and investors are kind of starving for any signal, in one direction or another,” said Matthew Keator, managing partner in the Keator Group, a wealth management firm in Lenox, Massachusetts.

“There have been these false or inaccurate reports, and the markets are swinging on that type of news.”

Volume on US exchanges was 17.79 billion shares, compared with the 20.09 billion average for the full session over the last 20 trading days.