Global Markets | Australian shares drop to 4-month low on patchy jobs report, Mideast war escalation

Australia's stocks benchmark closed at its lowest in nearly four months on Thursday as the escalating Middle East war unsettled global markets, reinforcing inflation ‌fears and curbing ⁠risk-taking ⁠amid mixed local labour data. The benchmark S&P/ASX 200 closed down 1.7% at 8,497.8 points after ending the previous session up 0.3%.

Geopolitical risks intensified after strikes targeting Gulf energy infrastructure. U.S. President Donald Trump warned that Washington would respond forcefully if Iran continued attacks on regional facilities, raising fears of broader disruptions to global energy supply. Australian energy stocks climbed 5.1% to a more than ⁠two-year high as oil ‌prices surged. Woodside rose 7.2%, while Santos gained 3.2%.

"Volatility will stay high while uncertainty over the war and energy prices persists. ⁠We are currently seeing liquidation rather than rotation in equity markets, which contrasts with the past year of ASX performance," said Phil Cornet, portfolio manager, Atlas Funds Management. Meanwhile, Australian labour market data released on Thursday painted a mixed picture. While employment increased, the unemployment rate also rose.


It complicates the inflation outlook and adds uncertainty over the Reserve Bank of Australia's May meeting. The RBA on Wednesday delivered a split ‌decision to raise interest rates.

On the sectoral front, miners dropped 5% to their lowest level since late December, weighed by softer commodity prices.

Heavyweights BHP and ⁠Rio Tinto each fell more than 3%. Gold stocks also declined 9.2%, hitting its lowest level in over four months as bullion prices eased.

Financials slipped 0.5%, with three of the "Big Four" banks losing between 0.3% and 1.3%. Commonwealth Bank of Australia rose 0.2%. Elsewhere, New Zealand's S&P/NZX 50 fell 2% to 13,051.61, its lowest in a month, after softer-than-expected fourth-quarter GDP growth.

Spark New Zealand, Gentrack Group and KMD Brands led declines on the benchmark, each falling between 4.4% and 5.3%.