12 hours ago
‘Nervous': Trump strikes spook ASX
Oil prices have surged as the rest of the market wobbled on Monday morning, with the ASX 200 suffering a 'very nervous start' to the trading week.
The ASX 200 fell 44.30 points or 0.52 per cent to 8,461.20 on the opening bells, as investors weighed up the risks in the Middle East.
The Aussie dollar also slumped, falling from US64.94 cents to US64.48 as the tension escalates.
On Saturday (Sunday AEST), US forces confirmed strikes on three Iranian nuclear facilities in the latest flair up between Israel and Iran.
US President Donald Trump said the three nuclear sites in Iran – Fordow, Isfahan and Natanz were 'completely obliterated' but this is yet to be independently verified. ASX falls on Iran- Israel tensions. Picture Newswire/ Gaye Gerard. Credit: News Corp Australia
The armed conflict sent the price of Brent crude oil surging to above $US80 a barrel, after sitting around $US65 in the two weeks prior to the start of the most recent conflict in the region.
senior financial market analyst Kyle Rodda said traders will be looking to gauge risks of energy shocks and the potential impact of the broader conflict.
'The markets are confronting a very nervous start to the week where the only thing that will matter is the fallout from the US missile strike on Iranian nuclear assets over the weekend,' Mr Rodda said.
'The first moves will be reactive, possibly kneejerk, and out of fear: a typical shoot first and ask questions later approach.
'But as the dust settles and more of the facts become known – especially the extent of the damage achieved by the US – the markets will turn to gaming out the likely course of events from here and quantifying the risks to asset prices.'
Mr Rodda said there are two critical parts for the markets, being a regional war or if Iran retaliates to US strikes by cutting off the Strait of Hormuz, an important 20 mile stretch which is the primary route of exports like Saudi Arabia, Iraq, the UAE, and Kuwait.
'There's already some talk of the latter from the Iranianans, with the instability in the region and risks to critical infrastructure alone enough to worry energy markets,' he said.
US secretary of state Marco Rubio said closing the crucial Strait of Hormuz would be a 'suicidal' move to the Iranian regime.
Mr Rubio said closing the strait would affect the US, but it would have 'a lot more impact on the rest of the world,' particularly on China.
'That would be a suicidal move on [Iran's] part, because I think the whole world would come against them if they did that,' Mr Rubio said.
