Australian share market: ASX200 nosedives as Donald Trump’s ultimatum to Iran over oil flow sparks sell-off

Tens of billions of dollars were wiped off the Australian share market in the opening minutes of trade on Monday, extending sharp falls from last week as growing unease over the US and Israeli war in the Middle East continues to unnerve investors. The S&P/ASX200 nosedived 1.8 per cent in the first 30 minutes, down 157.3 points to 8273. That was well down from its all-time record of 9200.9 reached just three weeks ago. The fresh round of selling took losses for the index over the past four weeks to more than 8 per cent — edging it closer to a technical market correction. Buyers returned mid-way through the session to pull the index back from the brink and trim the morning’s loses. At 9.45am, it was down 0.8 per cent to 8358.50. Rising oil prices and the ripple effects on the national economy has so far seen more than $280 billion erased from the ASX since the conflict began on February 28. All 11 sectors were deep in the red at the opening bell, bar energy stocks, which were marginally up as oil prices again jumped after Donald Trump issued an ultimatum to Iran over access to the Strait of Hormuz. The US president gave Iran a two-day deadline to reopen the global oil gateway or he would bomb its power plants. Mr Trump took to Truth Social on Sunday to threaten a huge escalation in the conflict. “If Iran doesn’t FULLY OPEN, WITHOUT THREAT, the Strait of Hormuz, within 48 HOURS from this exact point in time, the United States of America will hit and obliterate their various POWER PLANTS, STARTING WITH THE BIGGEST ONE FIRST! Thank you for your attention to this matter,” he wrote. Iran countered that it would close the strategic waterway “completely” and target energy, information technology and desalination infrastructure if its power facilities come under attack. “President Trump’s threat has now placed a 48-hour ticking time bomb of elevated uncertainty over markets,” IG market analyst Tony Sycamore said. Life360 was the biggest winner of the day so far, adding 3.7 per cent. AUB Group, Eagers Automotive, Premier investments and Steadfast Group rounded out the rest of the top-five, each climbing about 3.5 per cent. Miners suffered the biggest loses, down a collective 3.2 per cent. Iron ore powerhouses Rio Tinto, BHP and Fortescue were all down sharply at the start but managed to reverse course but remain in the red. Gold producers were under selling pressure, with Evolution Mining, Northern Star Resources and Newmont all falling about 6 per cent or more. IT (down 1.4 per cent), real estate (down 1.6 per cent), banks (down 0.7 per cent) and industrials (down 1.3 per cent) added to the carnage. Rates set to soar on rising oil Westpac said interest rate traders expect the Reserve Bank will need to raise the cash rate three more times to a peak of 4.85 per cent to tame inflation, which is forecast to reach 4.5 per cent to 5 per cent this year. At Monday’s open in Asia, benchmark Brent crude futures rose one per cent to $US107.47 a barrel. Base metals silver, platinum, copper and palladium all extending huge falls from last week. Gold traded flat, but tumbled last week. “The market is becoming increasingly worried this conflict could become a protracted affair, broader in nature and structurally inflationary,” said National Australia Bank’s economics team. “(Over the weekend) evidence mounted that the conflict was escalating rather than de‑escalating. Iran continued attacks on neighbouring Gulf states, while the IEA warned the war represents the greatest global energy security threat in history, with oil and gas infrastructure likely to take six months or longer to return to operation.” The war appears to be entering a new phase. On the weekend President Donald Trump threatened to hit Iran’s power grid if the Strait of Hormuz was not reopened. Iran Deputy Foreign Minister Kazem Gharibabadi said they would respond in kind to any attack on critical infrastructure. Gold glows again Gold gained modestly after the biggest weekly drop in more than 40 years, supported by dip-buying as traders weighted the escalating war in the Middle East. Bullion advanced as much as one per cent to top $US4500 an ounce in early trading, having lost nearly 11 per cent in its worst week since 1983. Surging oil prices have raised inflationary risks and reduced the likelihood of near-term interest rate cuts by the US Federal Reserve and other central banks. This is a headwind for non-yielding gold, which has declined for eight consecutive sessions. Bullion’s 14-day relative-strength index — a gauge of momentum — rebounded after falling below 30, a level that some traders see as oversold. More to come