ASX dives 1.7pc in $50b wipeout; Viva Energy soars on Mid East conflict

The sharemarket tumbled on Thursday, erasing more than $50 billion in value, as attacks on Middle East energy infrastructure pushed oil prices higher, stoking inflation fears and keeping a May rate rise firmly on the table.

The S&P/ASX 200 Index dropped by 142.80 points, or by 1.7 per cent, to 8497.80 – the lowest close since late November. Just three of the 11 sectors finished higher. Since the conflict in Iran kicked off at the end of the February, the benchmark has dropped 7.6 per cent, wiping about $265 billion in value.

Oil surged overnight after Iran and Israel traded strikes on key energy facilities in the Middle East, further roiling energy markets as the conflict stretches into three weeks. Brent Crude rose 4.5 per cent to $US112.17 a barrel in Asian trading, adding to a strong overnight surge.

UBS Global Markets executive director Rob Taubman said the market was moving to a prolonged period of elevated energy prices.

“Once you get to a multi-week impact of this, the supply chain starts being very disturbed and that’s why it’s now going to take a lot longer to normalise,” he warned.

“The latest attacks on infrastructure have heightened concerns about this being a long-running event.”

Rate fears

Local investors also focused on a robust February jobs report which showed Australia’s unemployment rate rose to 4.3 per cent as the participation rate climbed. The number of jobs climbed to 48,900 instead of the 20,000 expected.

Bond markets are now fully priced for two more rate increases this year which would take the cash rate to 4.6 per cent.

On the ASX, the energy sector jumped nearly 3 per cent as oil and gas prices climbed. Santos rose 3 per cent to $8, Ampol 4.6 per cent to $32.97 and Viva Energy 15.2 per cent to $2.43. Woodside Energy soared 7.2 per cent to $33.70 as it also appointed former Anglo American chief executive Mark Cutifani as a director.

Direct attacks on Qatar’s largest gasfield also boosted the prospects of the coal miners. Yancoal climbed 6.8 per cent to $8.03 and New Hope 5.3 per cent to $5.53.

Elsewhere, the materials sector tumbled almost 5 per cent, taking losses from a March high to 19 per cent – just short of bear market territory. Gold stocks led the sell-off after bullion plunged overnight after US Federal Reserve chairman Jerome Powell warned higher energy prices would push up inflation.

Multiple mid-cap gold miners fell by more than 10 per cent including Oba Banda Mining, which dived 14.1 per cent to $1.28. Heavyweight Northern Star tumbled 9.5 per cent to $18.96 and Newmont by 5.8 per cent to $146.25. The precious metal rebounded on Thursday 0.6 per cent to $US4848.

Rate-sensitive technology and real estate stocks also fell. WiseTech Global declined 7 per cent to $41.47, Xero by 3 per cent to $76.98 and Goodman Group shed 2.6 per cent to $25.59.

Stocks in focus

In company news, Lynas Rare Earths lost 2.7 per cent to $19.85 despite reporting the first production of samarium oxide at its Malaysian processing facility. It expands the group’s heavy rare earth product range.

Boss Energy dropped 6.8 per cent to $1.52 even as it increased the uranium resource at its Gould’s Dam and Jason’s satellite deposits in South Australia.

And Orora retreated 2.5 per cent to $1.92 as it appointed Paul Victor as chief financial officer, replacing long-serving finance chief Shaun Hughes.