ASX slides lower as miners and banks lose ground

The Australian sharemarket closed in the red on Friday as the big miners and banks lost ground, capping another soft week for the bourse amid ongoing concerns about the effect of the Iran war on energy prices.

The S&P/ASX 200 fell 69.4 points or 0.8 per cent, to 8428.40 at the close after another rollercoaster night on markets, dictated by fluctuating oil prices due to the Iran war. The ASX tumbled 1.7 per cent on Thursday.

The weakest sector was materials, with mining shares falling amid concerns a war-induced slowdown in the global economy will hurt demand.

BHP fell 1.8 per cent, Rio Tinto lost 2.9 per cent and Fortescue shed 0.4 per cent. Gold miners were mixed, with Evolution Mining gaining 1.6 per cent while Northern Star dropped 2.4 per cent in early trade. Silver prices also fell, driving South32 1.7 per cent lower.

Financial stocks closed weaker, giving up gains from earlier in the day. National Australia Bank fell most, losing 2.3 per cent, while Commonwealth Bank shed 1 per cent, and Westpac and ANZ Bank both lost 1.1 per cent.

Energy stocks were once again bolstered by the strength in oil prices, with Woodside Energy adding 1 per cent, Ampol gaining 0.4 per cent and Yancoal rising 3.5 per cent.

Solomon Lew’s Premier Investments fell 4.3 per cent on its results. Peter Alexander sales rose 4.9 per cent and Smiggle declined 10.7 per cent.

Market moves were dependent on energy price volatility and the outlook for the Iran conflict remained highly uncertain, Capital.com senior market analyst Kyle Rodda said.

“Higher inflation and lower growth is kryptonite to stocks,” Mr Rodda said. “We’re still in the midst of the war and for as long as that lasts I think things can be fairly bearish and certainly very volatile.”

As investors continue to focus on the Iran war the turmoil it has unleashed on energy markets, US President Donald Trump told reporters he’s “not putting troops anywhere” after being asked about the possibility of deploying US ground troops. Israeli Prime Minister Benjamin Netanyahu said Israel would refrain from more attacks on Iranian energy facilities.

Trump tried to downplay the recent spikes in oil prices during an appearance with Japan’s prime minister.

“I thought there was a chance it could be much worse,” he said. “It’s not bad, and it’s going to be over with pretty soon.”

The Australian dollar was trading at US70.81¢ at 5.46pm AEDT.

On Wall Street, the S&P 500 fell 0.3 per cent after erasing an earlier drop of 1 per cent. The Dow Jones lost 0.4 per cent and the Nasdaq composite fell 0.3 per cent. Markets in Europe and Asia had considerably larger losses, when oil prices were higher earlier in the day.

Brent crude, the international standard, briefly rose above $US119 ($168.70) per barrel in the morning before pulling back to $US108.65. A barrel of benchmark US crude was 1.8 per cent lower to $US93.74.

Trump and countries around the world have made moves to stem the spike in oil prices, but they’re mostly short-term fixes when markets want to see less risk for oil and gas fields around the Gulf and a clearance of the Strait of Hormuz off Iran’s coast, where a fifth of the world’s oil typically sails.

Worries are so high about oil prices that traders are now even betting on a slim chance that the Federal Reserve may have to hike interest rates this year. It’s a dramatic turnaround from before the war, when traders were betting heavily that the Fed would cut rates multiple times this year.

Cuts to rates would give the economy and prices for investments a boost, and they’re something Trump has angrily been calling for, but they would risk worsening inflation. The Fed on Wednesday decided to hold off on cutting interest rates at its latest meeting, and traders found comments from Chair Jerome Powell discouraging about the possibility for cuts in 2026.

Now, traders are betting on an 8 per cent chance the Fed could hike its main interest rate by the end of the year and an 80 per cent chance that it will at least hold steady, according to data from CME Group. Just a month ago, those same traders were betting on a 74 per cent probability of two or more cuts.

That drove Treasury yields higher, and the two-year Treasury yield touched its highest level since mid-2025.

The more widely followed 10-year Treasury yield rose to 4.28 per cent from 4.26 per cent late on Wednesday, up from just 3.97 per cent before the war with Iran started. Earlier in the day, the Bank of Japan, the European Central Bank and the Bank of England held their interest rates steady.

Besides the threat of higher inflation, a couple of solid reports on the US economy also helped to lift Treasury yields. One said fewer US workers applied for unemployment benefits last week, when economists were expecting a slight rise. Another said growth for manufacturing in the mid-Atlantic area unexpectedly accelerated.

Higher Treasury yields have already sent rates for mortgages and other kinds of loans upward, and a report on Thursday showed sales of new US homes unexpectedly weakened in January.

Higher Treasury yields also grind down on prices for all kinds of investments, from stocks to crypto to gold.

Stocks of companies that mine such metals fell to some of Wall Street’s sharpest losses. Newmont dropped 6.9 per cent and Freeport-McMoRan sank 3.3 per cent.

Helping to limit Wall Street’s losses was Rivian Automotive, which jumped 3.8 per cent. It announced a partnership where Uber would invest up to $US1.25 billion ($1.8 billion) in the company and expects to buy 10,000 autonomous robotaxis. Uber Technologies fell 1.7 per cent.

With AP, AAP, Bloomberg

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