Oil prices soar as ASX investors sell bank and technology stocks

An escalation in the US/Israel war with Iran has driven oil prices higher amid fears of a prolonged conflict, prompting ASX investors to swiftly dump bank and technology stocks.

Over the weekend, Houthi rebels fired missiles at Israel and there were also growing fears of a potential US ground attack on Iran.

That led to the ASX 200 dropping 55.3 points, or 0.6 per cent, on Monday to 8461, while the broader All Ordinaries fell 55.3 points, or 0.6 per cent to 8657.5.

Seven of the 11 sectors ended the day in the red — with only energy, utilities, materials and consumer staples advancing.

The benchmark has plummeted about eight per cent this month, leaving it on course for its steepest monthly drop since March 2020 when the Covid-19 pandemic erased about 20 per cent.

The big four banks took a hit, with Westpac diving 4.05 per cent, Commonwealth Bank dropping 2.83 per cent, National Australia Bank dipping 1.76 per cent and ANZ down 1.62 per cent.

Technology stocks, which have already been under pressure from artificial intelligence concerns, were further hampered by worries that the war would inflate interest rates.

WiseTech dived 4.77 per cent, Xero plummeted 3.21 per cent and NextDC slashed 1.4 per cent.

But the energy sector fared better, with Beach Energy increasing 1.96 per cent and Santos up 1.26 per cent.

Woodside Energy also advanced 2.18 per cent as it resumed loading LNG cargo in Western Australia after Tropical Cyclone Narelle.

Following an announcement from the Albanese government that it would halve the fuel excise for the next three months, Viva Energy climbed 2.01 per cent and Ampol was up 0.62 per cent.

The price of aluminium was also boosted after two Middle Eastern producers were allegedly hit by Iranian attacks.

South32 jumped 9.43 per cent, Alcoa soared 8.27 per cent and Rio Tinto rose 4.93 per cent.

In company news, Greatland Resources leapt 11.07 per cent — making it the strongest performer on the ASX — after it lifted its Telfer gold resource by 150 per cent to eight million ounces.

The bottom performing stocks were Temple and Webster, down 6.47 per cent, and Judo Capital dropping 6.23 per cent.

Meanwhile, the Australian dollar is buying 68.7 US cents.

Market analyst Tony Sycamore said the dollar’s trajectory this week would be heavily dictated by offshore geopolitics.

“Any further escalation in the Middle East will keep the Aussie under pressure, while any genuine progress toward reopening the Strait of Hormuz would be the catalyst for a much-needed relief rally,” he said.

“Locally, traders will also be keeping a close eye on the RBA meeting minutes.

“Markets will be scrutinising the minutes for clues on how much more tightening the board believes is still required, or whether this latest hike is seen as sufficient to keep inflation tracking sustainably back toward the two to three per cent target.”