ASX to fall; investors fret Iran attack will upend long bull run
The price of oil will spike as markets open and could even soar beyond $US100 a barrel after the Trump administration's intervention into a weeks-long war between Israel and Iran unsettles financial markets.
While the price of Brent crude has drifted more than 10 per cent higher since Israel first launched an attack on Iranian nuclear assets two weeks ago, traders fear US President Donald Trump's authorisation of bombing at the weekend will lead to a rapid escalation in the conflict.
In particular, traders are worried that Iran could constrict travel through the Strait of Hormuz, a key shipping route for oil that connects the Persian Gulf and the Gulf of Oman. If this closes, prices could increase significantly, pushing inflation higher and disrupting expectations that central banks including the Reserve Bank of Australia will keep cutting rates.
'For markets, this shatters the illusion of containment. What was a regional proxy conflict is now a high-stakes, US-driven air war targeting [weapons of mass destruction] infrastructure – with unpredictable spillovers across energy markets, global shipping lanes, and risk sentiment,' wrote SPI Asset Management's Stephen Innes of the bombing of nuclear facilities.
'This is no longer a waiting game – it's a market moment that demands positioning, not passivity,' he said in his Dark Side of the Boom newsletter.
The S&P/ASX 200 is priced to open 0.2 per cent lower on Monday, although those futures were set before the weekend strikes. Wall Street had ended the last week mostly lower, although traders had hedged their bets and markets had remained largely flat for days. The S&P fell 0.2 per cent, while the Dow and the Nasdaq rose 0.1 per cent and 0.2 per cent respectively. The ASX 200 eased 0.5 per cent last week, the first weekly drop in three months.
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Herald Sun
3 minutes ago
- Herald Sun
Defence shares are booming as Trump, Middle East fuel expectations for government spending
Investors who bought into defence-focused companies and exchange traded funds months before Donald Trump was elected US president are laughing all the way to the bank. As wars intensify and President Trump pressures allies to dramatically increase their defence budgets, hundreds of billions of extra dollars will soon be spent on countries' war machines – and a slice of that will flow to savvy investors. Several global defence stocks have doubled their share price in the past year, while many others have climbed three times more than overall markets in the US, Europe and Australia, which are up eight per cent to 10 per cent. Analysts say the outlook remains strong, with the Israel-Iran conflict the latest in a string of international crises. Unlike last year's AI boom, which largely focused on US companies, the defence boom spans many countries. However, some of the best-known US defence stocks Northrop Grumman and Lockheed Martin, have generated only meagre returns. This global theme, combined with the fact that Australia does not have a significant listed defence sector, means many investors are looking to exchange traded funds for global exposure, and they have been rewarded so far. Three ASX-listed defence ETFs debuted last year and have climbed between 55 and 74 per cent. The best performer is the VanEck Global Defence ETF. VanEck deputy head of investments and capital markets, Jamie Hannah, said flows into ASX-listed defence ETFs have surged since March as companies including Italy's Leonards SpA, Germany's Hensoldt AG and Britain's Babcock International enjoy 'triple-digit price growth in the last year'. Mr Hannah said government spending is increasing across Europe, the US and Asia-Pacific, providing long-term revenue for defence companies. 'We often hear the term 'arms race' used in everyday contexts, but the literal meaning of countries competing for military superiority essentially describes the current geopolitical predicament,' he said. 'The thing about an arms race is that there is no finish line and no one can ever actually win the race, yet countries, even those unwilling, are compelled to participate in order to maintain national security.' Mr Hannah said the VanEck ETF does not hold any Australian defence stocks, although clients have expressed interest in Droneshield, which is up 18 per cent in the past year. Another Australian stock with defence exposure is Perth-based Austal, which is up 164 per cent over the past year. Backed by the billionaire Forrest family, it's attracted interest from South Korea's Hanwha Group. Other local companies benefiting from defence spending include Codan, up 75 per cent, and Electro Optic Systems, up 109 per cent. 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Betashares senior investment strategist Cameron Gleeson said many global defence contractors, including Rheinmetall, BAE Systems and Palantir, have seen a significant increase in orders and new government contracts. 'Investors are seeking exposure to the earnings growth these companies are experiencing, as well as the long tail of innovation that increased defence spending often provides,' he said. 'However, while defence companies are showing strong performance, much of the growth is happening outside Australia. As a result, investors may wish to look beyond the ASX for exposure to more mature global players with diversified revenue streams and government-backed contracts.' Mr Gleeson said investors should not focus solely on defence. 'Consider this sector for a satellite allocation, complementing a well-diversified core portfolio of Australian and international equities,' he said. Stake markets analyst Samy Sriram said defence ETFs are benefiting from investments in Palantir Technologies, which provides AI-powered defence software and sensors and has surged more than 440 per cent in a year. 'Palantir is a major beneficiary of higher defence spending, as it relies on government contracts for revenue,' she said. 'It is the third most traded stock on Stake this year. Firms that are investing in AI will be seen as increasingly important to the defence sector.' Stockspot CEO Chris Brycki said the shift to higher military spending started before Trump's re-election but his victory 'has added fuel to the fire'. Mr Brycki said Germany's defence spending increase is a notable example after it 'broke from decades of fiscal restraint by lifting its post-WWII cap on military spending'. 'This was a major policy shift that signalled how seriously many countries are now taking security,' he said. Originally published as Defence shares boom as wars intensify, company revenues surge Read related topics: Donald Trump
The Age
9 minutes ago
- The Age
Before and after satellite images reveal scale of destruction from US bombing assault on Iran's nuclear sites
They were the strikes that took Iran – and the world – by surprise. Just days after US President Donald Trump told Iran it had two weeks to negotiate an end to its nuclear program, he announced on social media that the US had struck three key Iranian enrichment sites in the dead of night. Late on Saturday US time, Trump said the sites at Natanz, Isfahan and 'nuclear mountain' Fordow had been 'completely and totally obliterated', although Pentagon officials said it was too early to assess the destruction, which appeared to be 'extremely severe'. Loading Since then, satellite images have emerged which show the devastation wrought by the US and its 13,600-kilogram bunker-buster bombs. Here's what we know and can identify from the images so far. Fordow The enrichment site at Fordow was built secretly, deep inside a mountain to protect it from attacks before it was revealed in 2009. It has been the focus of Israel's efforts to end Iran's nuclear program, but only in these latest strikes has the US deployed B-2 bombers carrying the GBU-57 bunker-busting bomb required to penetrate the underground facility. Analysis by CNN shows at least six large craters at the site after the US' strike, with grey dust and rubble around the possible entry points for bunker-buster bombs. The United Nations' International Atomic Energy Agency (IAEA) has said it is unable to assess damage to Fordow because of its underground location and the penetrating nature of the bombs used. Natanz Natanz, Iran's largest uranium enrichment site, sustained heavy damage in earlier strikes by the Israeli military. Following the US strikes, satellite images show two large craters, which appear to have been caused by bunker-buster bombs, above the suspected locations of the complex's underground enrichment halls. Isfahan The Isfahan site, believed to be the primary location for Iran's secret nuclear weapon development program, appeared noticeably more blackened and rubble-strewn in satellite images from Sunday. Because Isfahan was attacked with more than two dozen Tomahawk missiles launched from a US Navy submarine, above-ground damage was more visible and straightforward to assess than the other two sites. Loading The IAEA has said based on the information available, there appeared to have been extensive additional damage, although it said Iranian nuclear authorities had told it there had been no increase in off-site radiation levels after the US' strikes. How the US' payload – and decoy – missions unfolded Under the US' 37-hour round trip mission, dubbed 'Operation Midnight Hammer', B-2 bombers struck the Iranian sites alongside fighter jets, with missiles also launched from a navy vessel in the Arabian Sea. A feint in which a group of B-2 bombers flew west across the Pacific Ocean as a decoy was used to maintain tactical surprise. Mid-air refuelling points meant US planes did not need to take off from bases on the territory of European NATO allies. This graphic, which uses US local times, lays out how the mission unfolded.
Sydney Morning Herald
10 minutes ago
- Sydney Morning Herald
Before and after satellite images reveal scale of destruction from US bombing assault on Iran's nuclear sites
They were the strikes that took Iran – and the world – by surprise. Just days after US President Donald Trump told Iran it had two weeks to negotiate an end to its nuclear program, he announced on social media that the US had struck three key Iranian enrichment sites in the dead of night. Late on Saturday US time, Trump said the sites at Natanz, Isfahan and 'nuclear mountain' Fordow had been 'completely and totally obliterated', although Pentagon officials said it was too early to assess the destruction, which appeared to be 'extremely severe'. Loading Since then, satellite images have emerged which show the devastation wrought by the US and its 13,600-kilogram bunker-buster bombs. Here's what we know and can identify from the images so far. Fordow The enrichment site at Fordow was built secretly, deep inside a mountain to protect it from attacks before it was revealed in 2009. It has been the focus of Israel's efforts to end Iran's nuclear program, but only in these latest strikes has the US deployed B-2 bombers carrying the GBU-57 bunker-busting bomb required to penetrate the underground facility. Analysis by CNN shows at least six large craters at the site after the US' strike, with grey dust and rubble around the possible entry points for bunker-buster bombs. The United Nations' International Atomic Energy Agency (IAEA) has said it is unable to assess damage to Fordow because of its underground location and the penetrating nature of the bombs used. Natanz Natanz, Iran's largest uranium enrichment site, sustained heavy damage in earlier strikes by the Israeli military. Following the US strikes, satellite images show two large craters, which appear to have been caused by bunker-buster bombs, above the suspected locations of the complex's underground enrichment halls. Isfahan The Isfahan site, believed to be the primary location for Iran's secret nuclear weapon development program, appeared noticeably more blackened and rubble-strewn in satellite images from Sunday. Because Isfahan was attacked with more than two dozen Tomahawk missiles launched from a US Navy submarine, above-ground damage was more visible and straightforward to assess than the other two sites. Loading The IAEA has said based on the information available, there appeared to have been extensive additional damage, although it said Iranian nuclear authorities had told it there had been no increase in off-site radiation levels after the US' strikes. How the US' payload – and decoy – missions unfolded Under the US' 37-hour round trip mission, dubbed 'Operation Midnight Hammer', B-2 bombers struck the Iranian sites alongside fighter jets, with missiles also launched from a navy vessel in the Arabian Sea. A feint in which a group of B-2 bombers flew west across the Pacific Ocean as a decoy was used to maintain tactical surprise. Mid-air refuelling points meant US planes did not need to take off from bases on the territory of European NATO allies. This graphic, which uses US local times, lays out how the mission unfolded.
