ASX Dips Amid Geopolitical Tensions; Oil Prices Surge

June 20, 2025 11:52 AM AEST | By Team Kalkine Media

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ASX Dips Amid Geopolitical Tensions; Oil Prices Surge — Image source: shutterstock

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Highlights

ASX opens lower as global tensions rise

Oil prices jump 3% amid Middle East conflict concerns

ASX200 impacted despite US market closure

The Australian share market opened in negative territory, reflecting investor caution driven by escalating geopolitical tensions in the Middle East. The benchmark ASX200 index showed weakness early in the session, even as Wall Street remained closed due to the Juneteenth public holiday.

Geopolitical Developments Spark Market Caution

A surge in oil prices added to the market's volatility. Crude prices spiked by nearly 3% following reports of continuing Israeli military strikes on Iran. These developments followed statements suggesting the possibility of heightened military action by the United States, with Donald Trump reportedly contemplating strategic operations in the region within the coming fortnight.

This resurgence in geopolitical risk has prompted investors to reassess global market exposures, especially in energy and commodities-related sectors. As oil remains a key driver of inflation and cost inputs for many industries, such movements often ripple through broader equity markets.

Energy Sector Gains Amid Oil Rally

Energy stocks on the ASX were among the key beneficiaries of rising crude prices. Companies such as Woodside Energy Group Ltd (ASX:WDS) and Santos Ltd (ASX:STO) gained traction as global oil benchmarks edged higher. The upward momentum in energy prices typically supports the revenue outlook for producers and integrated energy firms.

However, the broader equity market sentiment remained risk-averse, reflecting the uncertain outlook for international diplomacy and commodity price stability. Investors appeared to adopt a wait-and-watch approach as they gauged the potential economic impact of prolonged conflict in the Middle East.

Tech and Growth Stocks Under Pressure

Technology and growth-oriented sectors faced headwinds, with several major players trading lower amid the broader market weakness. Companies like Xero Ltd (ASX:XRO) and WiseTech Global Ltd (ASX:WTC) saw selling pressure as risk-sensitive assets fell out of favor under the current macro backdrop.

The absence of trading activity on Wall Street also contributed to thinner volumes on the ASX, potentially amplifying price movements due to lower liquidity. Meanwhile, market participants are keenly monitoring developments ahead of the US Federal Reserve’s next policy commentary, particularly in light of inflationary pressures tied to energy markets.

As the day progresses, investors and market watchers will be closely tracking updates on both geopolitical developments and economic indicators. The situation continues to highlight the interconnected nature of global markets, where political events can swiftly influence financial outcomes.

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