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Highlights
- ASX set to break its three-week winning streak amid Middle East tensions.
- Oil prices rise, boosting energy stocks like Woodside and Santos.
- Mining sector drops as Chinese stimulus effects wane.
The Australian share market is on course to snap a three-week winning streak as escalating tensions in the Middle East shake investor confidence. The S&P/ASX 200 is down 0.8%, hovering around 8130 points, with 10 of the 11 sectors showing declines. Leading the losses are mining stocks, down 1.5%, as the broader market faces its first weekly drop in three weeks, down 0.9%.
Oil prices have taken center stage following remarks by U.S. President Joe Biden, who indicated that the U.S. is discussing potential retaliatory measures against Iranian oil assets in response to the ongoing conflict. This news drove oil prices sharply higher, with Brent crude and the U.S. benchmark, West Texas Intermediate, hitting their highest levels in a month. Futures contracts for both climbed more than 5%.
As oil prices soared, Wall Street saw mixed reactions. The Dow Jones fell 0.4%, the S&P 500 dropped 0.2%, and the Nasdaq ended the session largely unchanged. In Asia, oil prices have since stabilized, but energy stocks on the ASX remain up by 1.8%. Notably, Woodside Energy (ASX:WDS) rose 2.5%, while Santos (ASX:STO) gained 1.9%, benefiting from the surge in oil prices.
While energy stocks climbed, mining shares pulled back after a recent rally sparked by stimulus measures in China. The sector is down 2.1%, with BHP Group (ASX:BHP) dropping 2.5% to $44.24, as iron ore prices fell by 1% to just under $108 per tonne in Singapore. This comes after iron ore prices rallied nearly $20 higher last week.
Stocks in Focus
One standout performer today is gaming company Light & Wonder (ASX:LNW), which surged more than 8.7%. The rise comes after the company announced it would move forward with its revamped Dragon Train game, despite being involved in an intellectual property dispute with Aristocrat Technologies earlier this year.
Electro Optic Systems (ASX:EOS), a defense technology developer, saw its shares jump 9.2% following a boost in weapon system orders from an undisclosed Middle Eastern client. Earlier this year, the company reported a 6% rise in revenue during the first half of 2024 due to increased orders from the region.
Meanwhile, Woodside Energy (ASX:WDS) is in the spotlight for another reason. The company confirmed a fatality at its Beaumont Clean Ammonia site in Texas. While details remain unclear, Woodside reported that the site’s operations have been halted as an investigation gets underway.
In other market news, Regal Partners (ASX:RPL) has surpassed $17 billion in funds under management as its takeover talks with Platinum Asset Management (ASX:PTM) progress. The two wealth management giants are entering the due diligence phase this week, with Regal’s shares edging up 0.3% to $3.49.
As tensions in the Middle East continue to drive market volatility, sectors such as energy are seeing gains, while the mining sector experiences pullbacks. Investors are watching closely as geopolitical developments unfold, impacting both global and local markets.
