Aussie shares plunge, oil prices spike as war escalates
The Australian stock market fell 1.6 per cent in early trading while oil prices spiked following attacks on energy infrastructure in the Middle East.
The Australian share market fell in early trading after oil prices rose due to attacks on energy infrastructure in the Middle East, shaking investor confidence.
The benchmark S&P/ASX200 index dropped 139.7 points, or 1.62 per cent, to 8,500.9 in the first 30 minutes of trading on Thursday, while the All Ordinaries had dropped 150.2 points, or 1.7 per cent, to 8,697.5.
The losses left the S&P/ASX200 at its lowest level since late November and down 2.5 per cent since the start of the year.
The Qatar facility is said to have suffered extensive damage. Brent crude jumped $US3 a barrel to a nine-day high of around $US110.
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Meanwhile, in the US, the central bank left interest rates on hold, as expected, but comments made by Chairman Jerome Powell were viewed as hawkish, denting confidence.
Referring to the Middle East conflict, which was sparked by the US-Israel attack on Iran in February, Powell warned that higher energy prices would impact the economy.
“In the near term, higher energy prices will push up overall inflation, but it is too soon to know the scope and duration of the potential effects on the economy,” he said.
The US Federal Reserve has been flagging potential rate cuts this year but Powell told reporters that fewer members of its rate-setting committee favoured that move, given the uncertainties stemming from the war.
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This week, the Australian central bank hiked interest rates by 25 basis points to 4.10 per cent.
Every Australian market sector was down in early trading except for energy, which was up 3.4 per cent.
The biggest loser was materials, which had dropped 3.7 per cent amid heavy losses for gold miners.
The yellow metal tumbled – given the prospect of US interest rates staying higher for longer – to a six-week low of $US4,836, from over $US5,000 an ounce on Wednesday.
Goldminer Northern Star was down 7.3 per cent, Evolution had fallen 7.0 per cent and Westgold had dropped 7.8 per cent.
Elsewhere in the resources sector, Fortescue dropped two per cent, BHP fell three per cent and Rio Tinto lost 2.1 per cent.
In the energy sector, Woodside was up 4.6 per cent, Santos rose three per cent and Whitehaven Coal gained 3.4 per cent.
The Australian dollar was trading at 70.28 US cents, from 71.19 US cents late Wednesday afternoon.
-with AAP
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