ASX 200 slides 1.4% as US-Iran tensions send oil above $75

The ASX 200 tumbled 1.4% at Wednesday's open as renewed US military strikes on Iran drove Brent crude above $75 a barrel and deepened a global selloff in technology stocks.

The ASX 200 fell 1.4% at the open as oil's surge past $75 reignited inflation fears and South Korea's Kospi triggered a circuit breaker after sliding 8.2%.

"Oil's spike above $75 reignites inflation fears and complicates the rate outlook, hitting equities across the board," said Tony Sycamore, market analyst at IG Markets. "The market is now pricing in a higher probability of the Fed staying on hold."

Energy stocks surged as crude jumped, with Santos climbing 5.4%, Karoon Energy adding 5.3% and Woodside rising 3.2%. Miners led the decline — BHP dropped 2.8%, Rio Tinto fell 2.2% and South32 slid 2.8% — while technology names including WiseTech Global slumped 5.5%. The financial sector also weakened, with Commonwealth Bank down 1.2% and Westpac off 1.8%. The Australian dollar edged 0.2% lower to 69.39 US cents.

The selloff erased gains from Tuesday's session, when the ASX 200 closed 0.3% lower at 8,803 points. Traders are now watching for further escalation in the Strait of Hormuz, where US Central Command launched retaliatory strikes after Iran attacked three commercial vessels, and for US inflation data due later this week that could shift rate expectations.

Oil Surge Reshapes Sector Leadership

Brent crude jumped about 5.6% to $76 a barrel after the US Treasury revoked a waiver allowing Iranian oil sales beyond July 7, and US Central Command struck Iranian targets in retaliation for attacks on three commercial vessels transiting the Strait of Hormuz. The United Arab Emirates raised crude output above 3.8 million barrels per day in June, its highest since April 2020, while OPEC and its allies agreed Sunday to increase output targets by 188,000 barrels per day from August.

The energy rally was the day's clearest rotation signal. Ampol gained 3.4%, Viva Energy rose 4.2% and Beach Energy added 3%, while coal producers Whitehaven Coal climbed 2.3% and Yancoal advanced 1.9%.

Global Tech Rout Deepens

The selloff in technology stocks extended a second day of losses after Samsung Electronics posted a 19-fold jump in quarterly operating profit to 89.4 trillion won ($58.4 billion) — a record — yet saw its shares fall as much as 10% in Seoul as investors used the result to take profits. The MSCI Asia technology gauge fell as much as 4.9%, dragging SK Hynix and Kioxia lower.

South Korea's Kospi tumbled as much as 8.2%, triggering a 20-minute circuit breaker — the sixth time this year. On Wall Street, the Nasdaq 100 fell 1.8% as the VanEck Semiconductor ETF dropped 3.7%, with Intel off 9.6% and AMD down 6.5%.

Cross-Asset Spillover

US bond yields rose as oil's surge stoked inflation expectations, with the 10-year Treasury yield climbing 8 basis points to 4.55%, its highest since June 10. The 2-year yield added 7.5 basis points to 4.18%. Gold slipped 0.8% to $4,130 an ounce as higher energy prices raised the prospect of tighter monetary policy.

This article is for informational purposes only and does not constitute investment advice.