ASX 200 Weakens as Iran Conflict Escalates and Oil Prices Advance

Highlights

• ASX 200 dips amid global tensions following strikes on Iranian nuclear sites

• Oil prices strengthen as geopolitical concerns mount in the Middle East

• Market sentiment cautious with energy and resource sectors under focus

Australian equity markets started the session with downward momentum as geopolitical volatility resurfaced following reported military activity in the Middle East. The ASX 200, reflecting Australia's largest publicly listed companies, opened in negative territory, reflecting global concerns tied to escalated military actions involving Iran.

Wall Street’s subdued performance at the week’s close also weighed on local market confidence. This cautious stance from international markets preceded reports of air strikes targeting Iranian facilities, prompting risk-off sentiment across global trading desks.

Energy Sector Reacts as Oil Prices Climb

Oil markets responded swiftly to the rising geopolitical uncertainty, with prices trending upward on supply disruption fears. Energy-related stocks drew attention in the early trading session, with some experiencing early support as traders gauged how prolonged unrest could affect oil output and trade routes.

While the broader market softened, the energy segment displayed relative resilience, backed by the rising oil price environment and heightened attention on resource security.

Broader Index Performance and Currency Movements

The ASX 200 index hovered near neutral ground by mid-morning after initial declines, as gains in select energy names balanced out broader market weakness. The Australian dollar eased against major peers, mirroring risk-averse flows from traders shifting toward perceived safe havens.

Currency moves reflected growing market uncertainty, particularly with investors awaiting further developments from the Middle East. Market participants also appeared focused on whether new developments would trigger wider impacts on international supply chains and global inflation trajectories.

Market Sentiment Eyes Further Global Developments

The immediate future of Australian equities may remain closely tied to the unfolding geopolitical situation and its impact on commodity markets. While the domestic economy remains structurally resilient, any prolonged instability in global energy or security dynamics could continue to influence trading behaviour and cross-sector performance.

Traders and institutional desks alike are expected to closely monitor news from the region and any responses from global powers, with attention also turning toward how commodities will shape the next phase of equity sentiment.