ASX Slides as Geopolitical Tensions Rattle Global Markets; Energy Gains Temper Broader Losses

Key Highlights:

• ASX 200 falls 0.86% to 8,432.5 as Middle East tensions escalate
• Oil prices jump 2.7% as Strait of Hormuz disruption fears intensify
• MST Financial warns of “unprecedented energy shock” risk if Iran follows through
• US indices mixed; Dow edges up while Nasdaq slips
• Energy sector only gainer on ASX, while tech and materials drag indices lower

As the fog of geopolitical uncertainty deepens, the Australian share market stumbled on Monday, mirroring global risk aversion amid fears of escalating conflict in the Middle East. The S&P/ASX 200 fell 0.86% to close at 8,432.5, led lower by steep declines in materials (-1.61%), healthcare (-1.30%) and tech (-1.40%), while the energy sector eked out a modest 0.08% gain.

Image Source: MarketIndex | Source Link: https://www.marketindex.com.au

Image Source: MarketIndex | Source Link: https://www.marketindex.com.au

The market’s unease was fueled by U.S. military airstrikes on Iranian nuclear facilities over the weekend, raising the specter of retaliation that could disrupt critical energy supply chains through the Strait of Hormuz—a maritime chokepoint responsible for 20% of global oil and LNG shipments.

Saul Kavonic, Senior Energy Analyst at MST Financial, described the threat as “potentially three times larger than past oil shocks.” Speaking to ABC News, Kavonic added, “If Iran makes good on its threat to disrupt the Strait, we could be staring at petrol prices that double or worse, with no spare capacity globally to compensate. Even OPEC’s buffer supply can’t save the day this time.”

Oil prices reacted sharply. Brent crude surged to $78.38 per barrel (+1.44%), while WTI crude hit $75.13 (+1.48%). Gold, often a safe haven in times of geopolitical stress, edged down 0.42% to $3,355 per ounce.

Broader Market Impact

The negative sentiment wasn’t confined to Australia. Wall Street closed the week on a mixed note, with the Dow Jones rising marginally by 0.08% to 42,206.82, while the Nasdaq shed 0.51%, pressured by rate-sensitive tech stocks. The S&P 500 dipped 0.22% to 5,967.84, as investors balanced hopes of a Federal Reserve pivot with growing macro risks.

On the ASX, 10 of the 11 sectors closed in the red. The tech-heavy All Technology Index dropped 1.38% to 3,942.5, with sharp losses in names like Brainchip Holdings (-7.32%) and Weebit Nano (-4.95%). Materials were also hit hard, with Syrah Resources (-7.14%) and 29Metals (-8.00%) among the biggest decliners.

In contrast, Beach Energy (+2.56%) and Viva Energy (+3.62%) gained ground amid rising crude prices, offering a defensive cushion to the broader market.

Top Movers

Top Gainers:

• Vulcan Steel (ASX: VSL) +7.22% to $5.64
• MTM Critical Metals (ASX: MTM) +4.96% to $0.635
• Resolute Mining (ASX: RSG) +4.62% to $0.6225
  
   

Biggest Laggards:

• Adairs Ltd (ASX: ADH) -19.38% to $2.08
• The Star Entertainment Group (ASX: SGR) -8.93% to $0.1275
• Titomic Ltd (ASX: TTT) -8.33% to $0.275
  
   

Volatility Outlook & FX

Despite the jitters, the S&P/ASX VIX remains below 15, signaling expectations for relatively low volatility in the next 30 days—though many analysts warn that could change rapidly if oil flow is disrupted or Iran retaliates more broadly.

On the forex front, the Aussie dollar weakened 0.40% against the greenback to 0.6424, reflecting investor flight to safety amid rising global risks.

Looking Ahead

Investor focus will likely remain on geopolitical developments and any retaliatory actions from Iran. With the United States’ Strategic Petroleum Reserve near record lows, Kavonic warned, “The world is far less insulated from energy shocks than it was even three years ago. This could be a turning point.”

In the coming days, all eyes will be on oil inventories, central bank commentary, and the unfolding diplomatic narrative in the Middle East. Until clarity emerges, volatility is expected to remain elevated despite VIX readings.