The Australian sharemarket swung between gains and losses on Monday as a rally in energy shares, buoyed by the spike in the oil price and a $30 billion takeover of Santos helped offset heightened political risk in the Middle East.

The benchmark S&P/ASX 200 Index finished the session up just 1 point to 8548.4 points after six out of 11 sectors climbed, led by oil stocks. The All Ordinaries added 0.1 per cent.

Investors shrugged off a sharp sell-off on Wall Street that sent the S&P 500 down more than 1 per cent after Israeli strikes on Iranian energy infrastructure. Oil prices in the United States surged 14 per cent before settling 7.5 per cent higher at $US73 a barrel.

Traders are bracing for more wild swings in the oil market after Iranian military officials said Tehran was considering closing the Strait of Hormuz – a key shipping route that connects the Persian Gulf and the Gulf of Oman. Crude oil futures on Friday posted their biggest single-day increase in more than three years.

Rate cuts in question

The higher oil prices have raised investor concerns about inflation, which could derail expected interest rate cuts around the world. The US Federal Reserve, the Bank of England and the Swiss National Bank are all due to meet this week.

“While central banks would prefer to overlook a temporary spike in energy prices, if they remain elevated for a long period, it may feed through into higher core inflation as businesses pass on higher transport and production costs,” said IG market analyst Tony Sycamore.

“It adds another variable for the Federal Reserve to consider when it meets to discuss interest rates this week.”

On the ASX, the energy sector jumped 5.2 per cent, buoyed by the higher oil price and after a group led by Abu Dhabi’s state-owned company ADNOC agreed to buy Santos for $30 billion.

Santos shares rocketed by 10.9 per cent to $7.70 after the deal was confirmed on the ASX with an offer of $US5.761 per share. Oil and gas giant Woodside also rallied on Monday, finishing 3 per cent higher at $26. Beach Energy climbed 1.9 per cent to $1.33 and Karoon Energy gained 2.3 per cent to $2.03.

ASX-listed uranium stocks also roared higher on news the Sprott Physical Uranium Trust will raise $US100 million to buy the nuclear fuel. Tribeca’s Guy Keller said the news was “huge” and would drive the spot price “significantly higher from here”.

Shares in Deep Yellow surged 21.2 per cent to $1.60, Paladin rallied 15.6 per cent to $7.30, Boss Energy jumped 17.7 per cent to $4.30 and Silex Systems 23.9 per cent to $4. All four stocks are among the most shorted companies on the ASX.

Elsewhere, banks limited broader gains, with index heavyweight Commonwealth Bank slipping 0.03 per cent to $179.4. National Australia Bank, Westpac and ANZ were also weaker.

Stocks in focus

Evolution Mining dropped 8 per cent to $8.45 after UBS downgraded the gold producer to sell, saying it expected weaker FY26 guidance for some gold companies. Year to date, the stock has jumped more than 70 per cent.

UBS also lowered its recommendation for Northern Star to “neutral”, sending its shares down 8.2 per cent to $20.68.

ASX Ltd’s shares dropped 6.7 per cent to $67.90 after ASIC announced an inquiry into the market operator’s risk management, culture and governance standards to determine whether it is fit for purpose. The regulator’s chairman, Joe Longo, said the inquiry was the result of “repeated and serious failures” at ASX.

Infant formula maker Bubs rose 6.3 per cent to 17¢ after the company announced it had lodged its latest paperwork with the US authorities to seek approval to permanently sell three products in that market.

And Tourism Holdings soared 56 per cent to $2.10 after private equity group BGH Capital and Queensland brothers Luke and Karl Trouchet made a $471 million buyout offer for the campervan rentals business.