ASX dives amid escalating Middle East tensions

The laggards

Interest rate sensitive sectors such as information technology (down 1.7 per cent) and real estate investment trusts (down 1.4 per cent) took a hit after a US labour report overnight showed the jobless figures remained steady, boosting market fears that US interest rates would likely remain higher for longer. Higher rates are likely to erode future corporate profits and share price valuations.

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GQG Partners shares tumbled 3.8 per cent, making them the worst performing mega-cap, followed by Mineral Resources (down 3.8 per cent), South32 (down 2.9 per cent) and WiseTech (down 2.9 per cent).

Lithium miners Lynas Rare Earths and IGO also slipped, 2.7 per cent and 2.7 per cent, respectively.

Qantas shares fell 2 per cent after the airline told the ASX its chairman-elect John Mullen would start in the role earlier than expected, as the company’s outgoing chair Richard Goyder prepares for a fiery Woodside annual meeting.

Mullen, who is also chair of Treasury Wine Estates and Brambles, will start as non-executive director and chairman-elect on Monday – much earlier than the previously announced July 1.

The lowdown

AMP chief economist Shane Oliver said it was still too early to tell whether Israel’s military action against Iran would escalate to a full-blown war, and what the impact of it would be on oil prices.

Iran produces about 3 per cent of global oil supply and about 20 per cent of global oil flows through the Strait of Hormuz, both of which could be threatened if tensions further escalate.

On Wall Street overnight, US stock indexes drifted throughout the trading session to finish mixed as investors weighed up cautious US Federal Reserve Bank interest rate commentary and mixed quarterly earnings results.

The S&P 500 Index fell 11.09 points, or 0.2 per cent, to end the trading session at 5011.12 – its fifth straight loss and the longest losing streak since October. The benchmark has now pulled back more than 4 per cent from its record high.

The Dow Jones Industrial Average edged up 22.07 points, or 0.6 per cent, to 37,775.38, and the Nasdaq Composite slipped 81.87 points, or 0.5 per cent, to 15,601.5.

On Tuesday, US central bank officials including Fed chair Jerome Powell backed away from providing guidance on when US interest rates may be cut, saying instead that monetary policy needs to be restrictive for longer.

Tweet of the day

Quote of the day

“I want to see major multinationals like Procter & Gamble, Unilever, Kelloggs/Kellonova, Coca-Cola, PepsiCo, Mars, Nestlé and Mondelez Australia front this committee to explain why Australians are paying more at the checkout for their products,” NSW Liberal Maria Kovacic said, pressing the multinational food manufacturers to front up to a Senate inquiry. “These companies must respond to allegations and concerns that multinationals are a leading instigator of grocery price hikes. Australians deserve the full picture.”

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