The COB: Market Mayhem

Why It Matters

The shock rise in oil and bond yields raises the risk of stagflation and complicates central bank policy, increasing market volatility and forcing investors to reassess allocations; cash-rich players may find buying opportunities amid the dislocation.

Summary

Global markets tumbled Monday as a widening US–Israel–Iran conflict sent oil spiking toward and above $100 a barrel—at one point up about 25%—and knocked risk sentiment across equities and bonds. Australia’s benchmark slid as much as 4% intraday and was nearly 7% lower month-to-date, while three‑year Australian government yields jumped to 4.592%, the highest since mid‑2021. The dollar strengthened as a safe haven, airline and tech stocks fell sharply, and energy and coal names outperformed amid stagflation fears. Regional political developments in Iran and signs the conflict may be protracted intensified uncertainty and prompted calls for earlier rate hikes.

Original Description

Australian stocks started the trading week plunging to four-month lows, as the market mayhem caused by the Middle East conflict exacerbated.

The S&P/ASX 200 dropped a further 2.9% to close at 8,599 points. It was the biggest one day sell-off since US President Trump roiled markets with his "Liberation Day" tariffs last April.

Oil prices surged nearly 30% to US$120 a barrel, the highest level since the Russian invasion of Ukraine four years ago. The energy sector gained 1.8% with Woodside Energy up 2%, Santos firmer by 2.5% and Karoon up 10.2%.

The miners were in the red, with BHP losing 5.1% over the session. And gold was no place to hide, with investors favouring energy stocks. Northern Star fell 6.2%.

The financial sector also suffered from the negative market sentiment. All major major banks lost some ground, with CBA shedding 1.8%.

In corporate stories, Pro Medicus signed two US contract renewals worth $40 million dollars.

And Dyno Nobel dropped 9.7% as it sold the remaining of its fertiliser business to Mayfair Australia for a symbolic $1.

Tomorrow, we’ll get business and consumer sentiment indexes from NAB and Westpac. While CSL, Coles and Qantas are among companies trading ex-dividend.