Global Markets | Australian shares slip as renewed Middle East tensions curb risk appetite

Australian shares fell on Friday, wiping out gains from the previous two sessions, as broad-based selling swept the market after fresh exchanges of fire between the United ‌States and ⁠Iran rattled ⁠sentiment.

The S&P/ASX 200 index ended 1.5% lower at 8,744.40. Despite the decline, the benchmark rose 0.2% for the week, though it remained below record highs hit in early March. Investors capped a week in which the Reserve Bank of Australia hiked its interest rates for the third time this year.

However, sentiment worsened overnight, with the U.S. and Iran escalating hostilities.


"New clashes ⁠have shattered ‌hopes of a diplomatic resolution and triggered a flight to safety among investors," said David Tuckwell, chief investment officer at ETF ⁠Shares.

Mining stocks fell 1% on declining metal prices.

Global mining majors, BHP and Rio Tinto, fell 1% and 0.8%, respectively while Fortescue lost 0.7%.

Banks slipped 2.3%. Among lenders, Westpac was the biggest laggard on the sub-index after trading ex-dividend, while the other "Big Four" banks ended 1.5% to 2.9% lower.

Tuckwell added a weakening macroeconomic outlook, combined with a more hawkish central bank that has already delivered three rate hikes this ‌year, was putting pressure on banks. Top Australian investment bank Macquarie reversed course and closed 1.1% lower after hitting a record high earlier in the session, even ⁠as its commodities arm drove its strongest annual profit in three years amid Middle East volatility.

Energy stocks dropped 1.6%. Oil and gas firms Woodside Energy and Santos both shed 1.4%. Wagering firm Tabcorp fell 14.2%, extending losses after a more than 23% plunge in the previous session on a probe into money-laundering risks. In New Zealand, the S&P/NZX 50 index declined 0.7% to 13,175.13, though the benchmark still gained 1% for the week.