The Australian sharemarket managed a modest gain on Monday despite mounting concerns over rising oil prices and the prospect of global interest rate increases. The benchmark ASX 200 index rose 8.7 points, or 0.1 percent, closing at 8,749.9, while the broader All Ordinaries climbed 3.7 points, or 0.04 percent, to 8,923.9.
Investor caution was evident as the Australian dollar weakened against the US currency, falling to 71.43 US cents on fears that the Federal Reserve would hike interest rates. These worries were compounded by mixed sector performance, with seven of the 11 sectors recording gains despite declines in key mining stocks.
Health care and consumer staples led the advances, buoyed by strong performances from major companies. CSL shares increased 2.68 percent to $171.57, ResMed rose 0.63 percent to $30.50, and Pro Medicus added 0.64 percent to $165.40. The consumer staples sector also benefited from gains by supermarket chains Woolworths and Coles, which rose 0.65 percent to $38.75 and 0.9 percent to $23.44, respectively. A2 Milk shares advanced 1.35 percent to $6.74.
Conversely, mining stocks faced downward pressure amid a spike in oil prices triggered by escalating tensions in the Gulf region. BHP shares slipped 0.46 percent to $60.59, Fortescue Metals fell 0.84 percent to $16.53, and Rio Tinto edged down 0.06 percent to $168.20.
The surge in oil prices reflected renewed geopolitical instability, as reports surfaced of fresh attacks in Saudi Arabia and on vessels in the Persian Gulf. In particular, a Saudi oil pipeline closure and a military push by Yemen’s Houthi forces raised concerns over potential disruptions to global energy supplies. Brent crude futures jumped nearly 3 percent in morning trade, with market analysts warning that prices could surpass last week’s peaks near $110 a barrel.
Chris Weston, head of research at Pepperstone, highlighted the impact of the geopolitical developments on market sentiment. He noted that tensions had led to the temporary shutdown of a pipeline bypassing the Strait of Hormuz, coupled with a halt in diplomatic negotiations between Iran and Gulf states. Weston suggested oil prices may continue to climb further in the days ahead.
Investor sentiment was further dampened by a cautious Wall Street close overnight, following hotter-than-expected US inflation data that raised expectations for additional Federal Reserve interest rate hikes. Markets are currently pricing in an 87 percent likelihood of a rate increase when the US central bank meets next Wednesday. Similar expectations for monetary tightening are also emerging in the United Kingdom and Japan, underscoring a pivotal week for global central banks.
Among individual companies, Northern Star Resources shares rose 2.49 percent to $22.63 after the gold miner announced the appointments of Mark Cutifani and Peter Rozenauers as independent non-executive directors, effective October 1. Waste management firm Cleanaway saw its shares rally 4.67 percent to $2.69 on the confirmation that EQT Infrastructure is pursuing a takeover bid. Melbourne-based biotech Telix Pharmaceuticals surged 4.28 percent to $16.34 following FDA approval of its brain cancer imaging agent Pix-clarna.