The Australian sharemarket is expected to open higher with futures pointing to a 54-point, or 0.6%, gain, though this optimism faces challenges from escalating Middle East tensions. The S&P/ASX 200 Index closed Friday down 44 points, or 0.5%, at 8,796.70, despite seven of the market's 11 sectors finishing higher. The recovery comes as investors assess the impact of the widening US-Iran conflict, with energy stocks providing key support to the market's rebound. However, the latest escalation with US launching further airstrikes against Iran on Sunday in response to the deaths of US troops, while Iran fired missiles towards Jordan could temper early optimism as investors assess the impact of the widening war on oil prices, inflation and global economic growth.
Energy stocks emerged as the primary market driver, with Woodside Energy surging 3.3%, Santos gaining 1.9%, Ampol rising 1.7% and Viva Energy adding 1.3% as oil prices strengthened. Among major energy companies, Beach Energy and Origin Energy are gaining almost 1% each, while West Texas Intermediate crude for August delivery up $3.65 or 4.62% at $82.60 per barrel as the US-Iran conflict escalates. Global X ETFs senior investment strategist Marc Jocum noted that "energy stocks acted as the market's life raft" during the session, with the sector's strong performance following tit-for-tat attacks and restricted traffic through the Strait of Hormuz. The energy sector's recovery follows a weekend of escalating tensions, including strikes involving vessels transiting the Strait of Hormuz, while Tehran said the ceasefire had effectively collapsed.
The recovery was partially offset by weakness in gold miner stocks, with Northern Star Resources losing 4.1%, Evolution Mining declining 4.3% and Newmont shedding 3.6% after bullion briefly dropped below US$4,000 an ounce. Among technology stocks, NextDC down 2.5%, Life360 falling 3.4% and Megaport slumping 8.5% followed Wall Street lower, while Xero bucked the trend, adding 0.9%. The technology sector's mixed performance reflects ongoing concerns about Middle East tensions and inflation fears that continue to lift oil prices. Among the big four banks, Commonwealth Bank is gaining almost 1%, while ANZ Banking, Westpac and National Australia Bank are edging up 0.1 to 0.3% each. Mining heavyweights BHP and Rio Tinto fell 2.7% and 2.4% respectively, extending previous session losses as concerns about the Middle East conflict and global growth weighed on commodity stocks.
In company news, EQ Resources shares are jumping more than 27% after Andrew Forrest's investment vehicle agreed to acquire a 16.8% stake in the tungsten producer from Oaktree Capital Management, covering 862.1 million shares and 35.6 million options. Deep Yellow shares are surging more than 5% after the uranium miner secured two major civil and concrete construction contracts for its Tumas Project in Namibia, valued at approximately A$34 million. Coles gained 2.9% after abandoning its pursuit of Greencross Pet Wellness Company, while Telstra rose 2.7% as management appeared before a Senate inquiry into last week's outage. South32, Yancoal and Aurelia Metals are among the companies scheduled to release quarterly updates today, while Australian employment figures are due later in the week.
US markets showed continued weakness on Friday, with the Nasdaq tumbling 361.70 points or 1.4% to 25,520.24, the S&P 500 slumping 76.08 points or 1% to 7,457.69 and the Dow sliding 406.55 points or 0.8% to 52,146.42. Among the Magnificent Seven stocks, Meta dropped 2.7% and Alphabet declined 3.2%, while Apple was the only member to finish higher. Netflix tumbled 7% after issuing a weaker-than-expected earnings forecast, while Uber Technologies lost 2.1% after announcing a proposed acquisition of Germany's Delivery Hero worth almost US$15 billion. The Philadelphia Semiconductor Index fell 1.6% on Friday and 10% over the week, reflecting broader selling across artificial intelligence-linked stocks.
