Close of markets: ASX slides amid concern over Middle East escalation
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The declines on the ASX were led by the mining giants, with iron ore heavyweights BHP dropping 1.2 per cent, Rio Tinto down by 1.1 per cent and Fortescue slumping 4 per cent. They were weighed down by a 1.2 per cent fall in prices for the steelmaking material overnight.
Gold miners also declined, with Northern Star Resources and Evolution Mining losing 2.2 per cent and 3.6 per cent, respectively.
Though two of the big four banks finished higher, NAB and ANZ both closed lower at 0.2 per cent and 1.4 per cent, respectively, while Westpac finished flat. CBA, the biggest stock on the ASX, staged a late comeback from the day's losses to close 0.6 per cent higher.
Qantas Airways shed 1.7 per cent. The airline missed out on making it into the list of the top 10 best airlines for 2025 in a high-profile international aviation industry award. The lowdown
Kerry Craig, a global market strategist at JPMorgan, said the biggest takeaway from Wednesday was that while the Australian sharemarket and other markets globally were wobbling, investors weren't seeing drastic reactions to the significant global events unfolding, including dramatic swings from the price of oil.
'Markets haven't been as pessimistic as you'd imagine given the events happening in the Middle East,' Craig said.
With Iranian oil supply offset by other global producers and despite threats that the conflicts will grow, Craig says investors are viewing the risks from the conflict in Iran and Israel still as somewhat regionally confined.
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On Wall Street overnight, the S&P 500 fell 0.8 per cent following signals that the Israel-Iran conflict may be worsening and that one of the US economy's main engines is weakening. The Dow Jones dropped 0.7 per cent, and the Nasdaq composite fell 0.9 per cent.
Their declines accelerated after President Donald Trump raised the temperature on Israel's fight with Iran by calling for 'UNCONDITIONAL SURRENDER!' on his social media platform and saying, 'We are not going to' kill Iran's leader, 'at least for now.'
Before that, Trump had left a Group of Seven summit early and warned that people in Iran's capital should evacuate immediately. It took only about eight hours for Trump to go from suggesting a nuclear deal with Iran remained 'achievable' to urging Tehran's 9.5 million residents to flee for their lives.
The fighting has the potential to drive up prices for crude oil and petrol because Iran is a major producer of oil, and it sits on the narrow Strait of Hormuz, through which much of the world's crude passes. Past conflicts in the area have caused spikes in oil prices, though they've historically proven to be only temporary after showing that they did not disrupt the flow of oil.
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All the action took place as the Federal Reserve began a two-day meeting on interest rates. The nearly unanimous expectation among traders and economists is that the Fed will make no move.
The Fed has been hesitant to lower interest rates, and it's been on hold this year after cutting at the end of last year because it's waiting to see how much Trump's tariffs will hurt the economy and raise inflation. Inflation is near the Fed's target of 2 per cent.
More important for financial markets on Wednesday will probably be the latest set of forecasts that Fed officials will publish for where they see the economy and interest rates heading in coming years.
In the bond market, the yield on the 10-year Treasury eased to 4.38 per cent from 4.46 per cent late on Monday.
In other international sharemarkets, indexes fell across much of Europe after finishing mixed in Asia. Tokyo's Nikkei 225 index rose 0.6 per cent after the Bank of Japan opted to keep its key interest rate unchanged.
with AP, Bloomberg
The Market Recap newsletter is a wrap of the day's trading. Get it each weekday afternoon.
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Professional services firm Deloitte will manage the selection process for the two new teams, with initial bids closing in mid-August and final decisions expected by early September.
