Australian Stocks Extend Recovery

The S&P/ASX 200 edged down 0.1% to close at 8,617 on Friday and finished the week 2.6% lower, marking a second straight weekly loss as rising oil prices tied to the Middle East conflict fueled inflation concerns. Crude prices jumped after Iran intensified strikes on oil and transport infrastructure across the region, raising fears of supply disruptions. Higher fuel costs also lifted domestic inflation worries, prompting markets to raise the odds of a rate hike at the March 17 meeting of the Reserve Bank of Australia to about 78%. Gold miner Northern Star led the losses, down 18.8%, its worst session since late March 2020, after flagging difficulties in reaching its annual production forecast. Mining giant BHP Group also fell 1.7% as China widened its iron ore ban amid a month-long contract dispute, while Rio Tinto advanced 3.1% after Glencore revived hopes of a potential deal. Financials, up 1%, cushioned overall losses, while energy firms remained in the green.

The S&P/ASX 200 fell 0.3% to around 8,600 in Friday morning trade, extending losses from the previous session, and headed for its second weekly drop, as surging oil prices amid the ongoing Middle East war, fueled inflation fears and dampened global risk appetite. Iran’s new Supreme Leader vowed to keep the Strait of Hormuz effectively closed and warned Tehran could widen the conflict if attacks by the US and Israel persist, while President Trump said stopping Iran from developing nuclear weapons is a higher priority than the impact of rising oil prices. These pushed markets to price in an RBA rate hike as early as next week to address rising cost-of-living pressures. Miners and gold stocks remained under pressure, with heavyweights BHP and Rio Tinto down 2.5% and 1.4%, respectively, while Northern Star plunged 14% after warning it faces challenges in meeting its FY26 gold production guidance. Meanwhile, financials rebounded and energy firms continued to benefit from higher fuel costs.

The S&P/ASX 200 closed 1.3% lower at 8,629 on Thursday, reversing a two-session recovery as a surge in oil prices tied to the escalating Middle East tensions fueled inflation concerns and weighed on risk sentiment. Oil jumped after attacks on vessels in the Strait of Hormuz, a critical chokepoint for global oil shipments, heightened fears of supply disruptions from the Gulf. This came despite a coordinated release of oil reserves by major economies. The spike in energy prices raised worries about renewed cost pressures, particularly through higher fuel costs, adding pressure to the Reserve Bank of Australia to raise rates as early as next week. Markets lifted the implied probability of a hike to about 78%, up from below 30% earlier in the week, with another increase now fully priced in by August. Banks, miners, gold, and tech stocks all retreated, with heavyweights Commonwealth Bank, BHP, Newmont, and Wisetech down 1% to 6%. Meanwhile, energy firms outperformed, led by Santos, up 1.5%.