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Highlights
- ASX ends a three-week winning streak due to Middle East tensions.
- Energy stocks gain as oil prices surge; mining and banks decline.
- Small-cap tech and gaming stocks see notable gains.
The Australian share market ended its three-week winning streak on Friday, with the S&P/ASX 200 closing 0.7% lower at 8150 points, leading to a weekly loss of 0.8%. Mounting concerns over escalating conflict in the Middle East triggered a sell-off in equities, pulling shares from record highs seen just a week earlier. Nine out of the ASX’s 11 sectors finished the session lower.
The downturn was largely driven by fears of a potential retaliation by Israel on Iranian oil assets, following comments from U.S. President Joe Biden on Thursday. Oil prices surged more than 5% after the news, with both West Texas Intermediate and Brent Crude holding onto those gains throughout Friday's trading. This sent the ASX energy sector up by 1.8%, with several stocks benefiting from the spike in oil prices.
Woodside Energy (ASX:WDS) gained 2.2%, closing at $26.64, while Santos (ASX:STO) rose 2.1% to $7.30. Smaller players in the oil and gas sector also saw strong gains, with Horizon Oil (ASX:HZN) rising 7.5% to 21.5¢, Strike Energy (ASX:STX) up 9.5% to 23¢, and Karoon Energy (ASX:KAR) climbing 2.2% to $1.65. Petrol retailer Viva Energy (ASX:VEA) also saw a rise of 3.1% to $3.02.
While energy stocks thrived, the mining sector took a hit, reflecting waning momentum from last week’s rush toward commodities spurred by renewed Chinese government stimulus efforts. BHP (ASX:BHP) fell 1.7% to $44.58, and Rio Tinto (ASX:RIO) slipped 1.9% to $103.02. The major banks followed suit, with Commonwealth Bank (ASX:CBA) dropping 1.4% to $132.74, and Westpac (ASX:WBC) falling 1.9% to $30.14.
Among the smaller players, Electro Optic Systems (ASX:EOS), a small-cap tech company focused on defense systems, gained 5.1% to $1.54 as traders speculated that increased Middle East tensions could boost demand for its technology. The company previously reported strong first-half revenue in 2024 due to increased weapon system orders from a Middle Eastern client.
In the gaming sector, Light & Wonder (ASX:LNW) surged 7.8% to $140.69 after announcing plans to develop a new version of its popular Dragon Train game. This comes after the company resolved an intellectual property dispute with Aristocrat Leisure (ASX:ALL) earlier in the year.
Asset manager Regal Partners (ASX:RPL) added 2% to $3.55 as the company’s funds under management topped $17 billion. Meanwhile, Regal continues its takeover discussions with Platinum Asset Management (ASX:PTM), whose shares also rose 1.7% to $1.23. However, fellow asset manager Magellan Financial (ASX:MFG) saw its shares drop by 3.2% to $9.62 after reporting $200 million in outflows during September.
As geopolitical tensions continue to affect market sentiment, investors will be closely monitoring developments in the Middle East and their impact on key sectors like energy and defense.
