ASX sinks, then recovers after Iran missile strike
The stock market’s 0.1 per cent decline on Wednesday belies the real drama which occurred during the session.
As Australia’s stock market opened, news broke that Iran had retaliated against US provocation with missile strikes on its Iraqi bases. This sent the ASX into a sharp drop of 76.8 points, equating to a 1 per cent decline.
However, the lack of a fiery response from the United States in the following hours calmed market nerves.
The ASX rebounded in the afternoon following much stronger than expected building approvals data and buoyed by stronger gold and oil stocks closed at 6817.6, a decline of only 8.8 points.
Head of Australian sales at UBS in Sydney, George Kanaan believe the market will shrug off the Middle East tensions in the short term.
“However it will be closely monitoring any further developments. Any future actions by either side will be taken much more seriously,” he told Reuters.
Meanwhile Gain Capital market analyst Matt Simpson says the historically high gold price is a good indicator of trader sentiment.
“It is holding above $US1,600 (per ounce). If there is confirmation that there are U.S. casualties, it could go higher,” he said.
“If it does look like we’ve got US casualties, then I don’t think Trump is going to just stand back and take that…World War III has been thrown around. I don’t think we’re there yet. But it does look like Iraq II.”
By the end of Wednesday’s session Wall Street futures had also recovered from a sharp plunge.
On the ASX the biggest gains were enjoyed by Independence Group, which jumped 6.3 per cent to $6.91 after beating second quarter production forecasts. And gold miner Newcrest increased 4 per cent to $32, the highest price in three months.
The biggest decline was an 8 per cent fall in PolyNovo to $1.87, erasing much of Tuesday’s 11.8 per cent rise, followed by a 5.3 per cent fall in fund manager Pendal Group to $8.54 following a downgrade to ‘underperform’ by Credit Suisse.
Telecommunication companies also posted solid gains on Wednesday. Vocus Group rose 1.75 per cent, to $2.91 while Telstra’s shares inched up 0.81 per cent to end the day at $3.74, and TPG Telecom climbed 1 per cent to $7.
Lucy Battersby has covered trends, technology and telecommunications since joining The Age in 2008.
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