Surging oil and metals prices helped Australia’s dominant resources sector defy wider sharemarket unease on Wednesday and drag the local bourse to another narrow gain.
Investors flocked to the nation’s biggest miners and energy firms as a cocktail of geopolitical tensions sent oil, iron ore, coal and gold sharply higher, helping the benchmark ASX 200 finish ahead for a fourth session.
The index added 15.3 points, or 0.22 per cent, to close the session at 7111.8 as iron ore heavies BHP, Rio Tinto and Fortescue Metals helped offset losses for the major banks and insurers.
Woodside Petroleum, Santos and Beach Energy also surged as energy prices rocketed above $US110 to eight-year highs on fears the war in Ukraine could disrupt oil production in Russia and lead to trade restrictions on gas exports into Europe.
“There is definitely a sense of fear in the air,” wrote OANDA’s Asia-Pacific analyst, Jeffrey Halley.
“Asia, of course, is acutely sensitive to higher energy prices, most of Asia being huge net energy importers.
“But disruptions to Russian metals exports and most certainly, Ukrainian food exports, are quickly combining to create a perfect storm in financial markets.”
It was a fourth straight gain for the ASX 200, although the index is still rebuilding after last week’s Russian incursion into Ukraine triggered a $70 billion nosedive.
Australia’s materials and resources sectors – along with selected utilities and consumer stocks – were almost wholly responsible for the latest rise as the fog of war continued to cloud global markets.
European and US stocks did little to inspire confidence early on, although a poor early start was soon righted by the iron ore heavies.
BHP climbed 3.8 per cent to $48.32 on a bulk metals boom, while rival Rio Tinto finished 4.6 per cent higher at $123.26, and Fortescue Metals climbed 4.7 per cent to $18.59.
Steelmaker BlueScope rose 3.3 per cent to $20.72 and OZ Minerals lifted 3.9 per cent to $25.79, while coalminer Whitehaven added 5.9 per cent to $3.58, New Hope gained 5.2 per cent to $2.81 and Yancoal finished 7 per cent higher at $4.28.
Gold also shone as investors continue to seek a hedge against global instability, pushing Newcrest Mining 1.1 per cent higher to $25.60 and lifting Northern Star 1.2 per cent to $10.14.
Woodside Petroleum added 6.1 per cent to finish at a new post-pandemic high of $30.44, fellow gas giant Santos rose 6.2 per cent to $7.71 and Beach Energy gained 4.2 per cent to $1.605.
Commonwealth Bank was the best of the Big Four lenders but still finished 0.1 per cent lower at $94.70.
Westpac lost 1.7 per cent, NAB 1.3 per cent, ANZ 2.2 per cent and Macquarie Group 1.9 per cent.
There were gains of 0.3 per cent and 0.7 per cent for Wesfarmers and Coles respectively but a 0.2 per cent loss for Woolworths, while Transurban and CSL were flat.
IG Market analyst Kyle Rodda said the days ahead would continue to be shaped by the unfolding military crisis in Europe.
“Russia looks hell bent on taking Kyiv, and despite what’s reported to be a very costly invasion for the country, it outwardly appears that Putin is in so deep, and is so blindly, madly focused on his goal, that there’s no desire yet to turn back,” he said.
“It does bring to mind the sunk cost fallacy, that ought to be familiar to many investors. It also makes one wonder if at this stage of the war, Putin is no longer behaving rationally. That’s a scary prospect if true – who other than the President’s inner sanctum would know? – because it means a back down is less likely, and violence could escalate much further.
“The big worry out of all of this – and this is the market’s doomsday scenario – is how seriously we should take all this nuclear-rhetoric from the Kremlin.”
Meanwhile, the broader All Ordinaries rose 15.8 points or 0.21 per cent to finish the day at 7401.1, while the Australian dollar was buyingxjmtzyw 72.68 US cents at the local close.
