4 days ago
Shares drop, oil and gold surge as Israel attacks Iran
Australia's share market has given up early gains after Israel's military launched air strikes against Iran, hammering risk sentiment.
The S&P/ASX200 is down 12.5 points, or 0.15 per cent, to 8552.6, as the broader All Ordinaries fell 21.3 points, or 0.24 per cent, to 8,774.7.
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.
Seven of 11 local sectors were trading lower after the attack, but a resulting surge in oil prices pushed energy stocks 3.9 per cent higher and utilities stocks jumped 3.8 per cent.
Brent crude futures rocketed more than seven per cent to 10-week highs to trade at $US73.76 a barrel by midday, injecting more than five per cent into the market capitalisations of Woodside and Santos.
Woodside was the best performer of the top-200, up 5.7 per cent to $24.80.
The safe haven of gold spiked more than one per cent to a new all-time high, with futures trading around $US3,450 ($A5,320) an ounce.
The precious metal was already on the way up ahead of the air strikes, after softer-than-expected US inflation numbers narrowed bets on future interest rate cuts by the US Federal Reserve.
Australia's gold miners were among the top-200's best performers, with Ora Banda, Emerald Resources and Newmont Corporation all up roughly six per cent.
The rally in gold stocks limited losses to the materials sector, which fell 0.4 per cent as large cap miners BHP, Fortescue and Rio Tinto traded lower.
Financials weighed on the bourse, sliding 0.4 per cent, tracking with the performance the four big banks, as CBA fell 0.3 per cent to $180.31.
Australia's tech sector fell 1.3 per cent, as investors backed away from high-growth in favour of more defensive assets.
Utilities stocks rallied after Israel's attacks, up 3.9 per cent, as Origin surged more than five per cent to $10.48 and AGL gained 3.5 per cent
The Australian dollar has slipped almost one per cent to 10-day lows to buy 64.86US cents, down from 64.96 US cents on Thursday at 5pm.
