ASX dips as gold, energy stocks soar after Iran attack
The Australian sharemarket drifted lower while gold and energy stocks soared after Israel launched airstrikes targeting Iran's nuclear sites and military leadership, raising fears over a significant escalation of hostilities in the Middle East.
The ASX 200 opened higher but fell into negative territory after the strikes were reported, with Israel claiming responsibility for the incident. The index closed 17.7, or 0.2 per cent, lower at 8,547.40, with eight of 11 industry sectors in the red.
Israel's attack on Iran came ahead of a sixth round of nuclear talks between US officials and Tehran over the gulf state's uranium enrichment activities, and a day after the US authorised a partial evacuation of its embassies in the Middle East.
Israeli officials said its defence force had launched attacks on 'dozens of military targets', and declared a state of emergency ahead of expected retaliation from Iran.
The escalation was a blow to risk sentiment and came at a crucial time after macro and systematic funds had rebuilt long positions and investor sentiment had rebounded, IG Markets analyst Tony Sycamore said.
'While we await further news and a potential response from Iran, we are likely to see a further deterioration in risk sentiment as traders cut risk seeking positions ahead of the weekend,' he said.
Israel's strike on Iran has also injected a fresh bout of geopolitical risk into an oil market that has been in the doldrums due to concerns about the global economy and supply increases from OPEC+.
Brent crude jumped more than 13 per cent following the attacks, and energy stocks on the ASX surged, with Woodside jumping by 7.4 per cent while Santos climbed 3.7 per cent.
Fears of an oil glut later this year are now being replaced by calls for higher prices, at least in the short term. Much will depend on Iran's response and whether key energy assets in the Middle East or tanker traffic through the region are affected.
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