ASX closes in the red as Biden comment sparks oil price surge

Welcome to your five-minute recap of the trading day.

The numbers

The Australian sharemarket has finished the week in the red, weighed down by the mining and technology stocks, as investors keep a watchful eye on the growing conflict in the Middle East and the latest monthly jobs data out of the US.

The S&P/ASX 200 Index closed 55.2 points, or 0.67 per cent, weaker at 8150.0 points, with energy stocks the notable winners of the day on the back of rising oil prices. Woodside Energy jumped 2.2 per cent to $26.64, while Santos closed the session 2.1 per cent stronger at $7.30.

Wall Street declined across the board.Credit: Bloomberg

The lifters

Strike Energy (up 9.5 per cent) and Viva Energy Group (up 2.4 per cent) were also higher as the oil price surged on the possibility that Israel’s retaliation against Iran for its recent missile barrage could include strikes on the country’s oil infrastructure.

Pokies maker Light & Wonder (up 7.8 per cent) also posted a stellar session, along with biotech Mesoblast, which closed 10.4 per cent higher at $1.49.

The laggards

Mining giants BHP (down 1.7 per cent), Fortescue (down 1.1 per cent) and Rio Tinto (down 1.9 per cent) closed weaker on the back of softer iron ore prices as the boost from China’s massive stimulus measures fades.

Lithium outfit Liontown Resources finished as the worst performer on the index, falling 3.9 per cent, followed by healthcare company Nanosonics (down 3.8 per cent) and mining contractor NRW Holdings (down 3.6 per cent).

The technology sector (down 1.2 per cent) had a poor session, with sector heavyweights – WiseTech Global (down 3 per cent) and Xero (down 0.5 per cent) – closing weaker.

The lowdown

AMP chief economist Dr Shane Oliver said the moves were not big but indicated shares were vulnerable in the short term after their surge in September to record highs.

Sharemarkets would quickly settle down if Israel’s response was proportional and directed at Iranian military facilities, but a strike on Iran’s nuclear facilities, oil production sites or oil-exporting infrastructure could leave equities in for a much bumpier ride, Oliver said.

Global oil prices surged overnight. Credit: AP

If the conflict escalated and Iran blocked the Strait of Hormuz, oil could surge back to its post-Ukraine invasion highs of $US120 a barrel, adding 50¢ or more a litre at the petrol bowser for Australian motorists, he said.

Oil prices soared on Thursday, with Brent and WTI futures gaining about 5 per cent each to $US77.48 and $US73.65 respectively, after US President Joe Biden was asked if he would support Israel striking Iran’s oil facilities. “We’re discussing that,” Biden said. “I think that would be a little – anyways.” The White House didn’t respond to requests for comment on Biden’s statement.

Later, when asked about Biden’s comments, a Pentagon spokeswoman said the US was discussing with Israel “what a response to Iran would look like”.

“It’s more about trying to understand what their response might be,” spokeswoman Sabrina Singh said in a briefing.

On Thursday, the S&P 500 lost 0.2 per cent, The Dow Jones fell 184.9 points, or 0.4 per cent, and the Nasdaq Composite finished flat.

Data released on Thursday showed that the number of Americans filing new applications for unemployment benefits rose marginally last week.

Investors will next focus on the September US non-farm payrolls report to be released on Friday night AEST. Financial markets are eager for more data on the labour market after the Federal Reserve last month cut its benchmark interest rate by an unusually large 50 basis points, the first reduction in borrowing costs since 2020.

Tweet of the day

Quote of the day

“I can tell you that any more than two toilets in a house is probably getting excessive. I see people designing houses with an ensuite attached to every bedroom, and then plus two.

“I think it’s a little bit stuck in that same way of seeing a large house as a conspicuous wealth thing. We all know [toilets are a] pain to clean, expensive, not well-used … so why would you bother?”

That’s the new host of Grand Designs Australia Anthony Burke having lunch with Julie Power, flushing away architecture and design misconceptions in the home.

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Last month, Regal Partners, which has been at the forefront of consolidation in the Australian funds management industry, launched a scrip-based takeover bid for Platinum. The opportunistic bid was rejected by Platinum’s board. Several sources speaking under the condition of confidentiality, reveal another interested bidder.

With AAP, Reuters, Bloomberg

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