Rising tensions between the United States and Iran is boosting gold and oil prices, which had a positive influence on Australia’s resources-heavy sharemarket on Monday. Gold started moving towards record highs in Australian dollar terms, jumping 6 per cent in four days up to $2282 per ounce.
The S&P/ASX 200 closed flat at 6735.7 points as gains in oil producers like Woodside Petroleum, Santos and Oil Search, and gold miners like Evolution Mining, Newcrest and St Barbara outweighed declines in financial and agricultural stocks.
Potential losses and damage from the bushfires dragged on the share price of Bega Cheese, which closed 9.3 per cent lower at $3.92 on Monday. Widespread evacuations from coastal areas also prompted resort property owner Aspen Group to warn of a $500,000 hit to revenue as visitor numbers were reduced due to road closures and unreliable supplies.
“The primary driver and theme for the market today has been tensions in the Middle East, and the prospect for some level of conflict between the US and Iran,” said IG market analyst Kyle Rodda.
“The rhetoric thrown around between the US and Iran is still fairly bellicose and sapping risk appetite somewhat. Oil prices have rallied as a result, as markets price in the chance of disruptions to energy supply chains in the Gulf.”
“Gold surged off the $US1450 mark, where it was very securely supported for a number of weeks. But on top of this, the risk-off sentiment has driven investors to gold, as has the subsequent fall in bond yields. Gold prices have also benefited from a weaker US dollar, which sold off on Friday after some softer than expected US economic data,” he said, adding falling bond yields usually weigh on bank stock prices.
Santos shares tapped $8.65, its highest price in five years, boosted by the oil price rising 2 per cent over the weekend. However, the rising oil price weighed on airlines, with Qantas falling 2.6 per cent to $7 and Domain Holdings hit its highest ever price of $3.82 today since floating in late 2017.
Telstra also had a good day, with gains of 0.8 per cent to $3.62, while Wesfarmers gained 0.9 per cent to $42.20.
Apart from Bega Cheese, other food producers dropped as traders speculated on the impact of fires and drought around the country. Costa Group slid 3.2 per cent to $2.41, while farming-linked companies like Elders dropped 3.1 per cent to $6.28, Nufarm fell 2.8 per cent to $5.93, and GrainCorp dropped 2.5 per cent to $7.68.
Source: Thanks smh.com