The path is unlikely to be smooth. Periods like this call for discipline.
When the arteries of global trade constrict — as they do when the Strait of Hormuz becomes a bargaining chip in a war of words and missiles — the anxiety travels fast, from oil futures to bond yields to the morning screens of investors in Sydney. On Monday, the ASX fell 1.4 per cent as Brent crude surged past $110 a barrel, a reminder that geopolitical fire does not stay contained to the regions that light it. What is unfolding is an old and familiar reckoning: the cost of energy shapes the cost of everything, and when that cost rises under the shadow of conflict, the question of who bears the burden — consumers, corporations, or central banks — becomes suddenly, urgently alive.
- US-Iran tensions over the Strait of Hormuz have pushed Brent crude above $110 a barrel, with President Trump warning Iran its 'clock is ticking' — language that markets are reading as an escalation, not a negotiation.
- Bond yields are spiking sharply, with the US 10-year Treasury climbing to 4.59 per cent, as traders abandon any remaining hope of Federal Reserve rate cuts in 2026 and some begin pricing in hikes instead.
- The ASX lost 1.4 per cent with mining giants BHP, Rio Tinto, and Fortescue all falling more than 2 per cent, while agribusiness company Elders collapsed 22.9 per cent despite a profit rise, citing fuel and fertiliser cost pressures from the conflict.
- Wall Street's AI-driven rally hit a wall, with Nvidia dropping 4.4 per cent and the Nasdaq sinking 1.5 per cent from a record high set just the day before — a sharp reversal that signals the market's tolerance for risk is thinning.
- Energy stocks were the sole refuge, with Woodside, Santos, and Viva Energy all gaining as crude prices climbed — a split market that reflects a world where one sector's windfall is another's existential pressure.
The Australian sharemarket fell sharply on Monday as oil prices surged and inflation anxiety swept through global markets. The S&P/ASX 200 dropped 123.6 points, or 1.4 per cent, to 8507.20, with ten of eleven sectors closing lower. Only energy stocks found footing, lifted by crude's relentless climb.
The catalyst was the bond market, where the yield on the US 10-year Treasury jumped to 4.59 per cent — well above the 3.97 per cent it held before the US-Iran conflict began weeks ago. With the Strait of Hormuz still closed to normal shipping and President Trump warning on social media that Iran's 'clock is ticking,' Brent crude surged above $110 a barrel. The geopolitical stakes are reshaping the inflation outlook in real time.
Mining stocks bore the heaviest losses, with BHP, Fortescue, and Rio Tinto each falling more than 2 per cent. Gold miners fared worse still, with Evolution Mining down 5.7 per cent as traders rotated out of defensive positions. The day's most dramatic fall belonged to Elders, the agribusiness group, which tumbled 22.9 per cent despite reporting a profit increase — the company warned that elevated diesel, fuel, and fertiliser costs from the conflict posed serious headwinds ahead.
Energy companies were the clear winners. Woodside, Santos, Ampol, and Viva Energy all gained more than 2 per cent as crude prices climbed. Financial and technology stocks were mixed, offering little conviction either way. The Australian dollar slipped to US71.23¢.
Wall Street had already stumbled on Friday, with the S&P 500 falling 1.2 per cent from a record high set the day before. Nvidia, the emblem of the AI boom, dropped 4.4 per cent and was the single heaviest drag on the index. Brian Jacobsen of Annex Wealth Management noted that markets had 'pushed into overbought territory,' and cautioned that while corporate fundamentals remained sound, 'the path is unlikely to be smooth.'
Traders have now effectively abandoned expectations of any Federal Reserve rate cuts in 2026, with some beginning to price in hikes. The message settling across markets is an uncomfortable one: inflation is sticky, geopolitical risk is structural, and the era of easy monetary relief may be further away than anyone hoped just weeks ago.
The Australian sharemarket retreated sharply on Monday as oil prices climbed and inflation worries rippled through global markets over the weekend. By early afternoon, the S&P/ASX 200 had fallen 123.6 points, or 1.4 per cent, to 8507.20. Ten of the eleven industry sectors were in the red. Only energy stocks managed gains, buoyed by crude's relentless climb.
The trouble began in the bond market, where yields spiked as traders fretted about persistent inflation and what it might mean for interest rates. The yield on the 10-year Treasury rose to 4.59 per cent from 4.47 per cent the day before—a sharp move that signaled real anxiety. That level sits well above the 3.97 per cent it held before the war between the US and Iran began weeks ago. The conflict has left the two sides far apart on a deal to reopen the Strait of Hormuz, a chokepoint for global oil shipments. President Trump posted on social media Sunday that Iran's "clock is ticking" and warned "there won't be anything left of them" if they don't move fast. Brent crude surged above $110 a barrel, having already gained nearly 8 per cent the previous week. West Texas Intermediate rose above $107.
Mining stocks bore the brunt of the selloff. BHP fell 2.4 per cent, Fortescue lost 2.6 per cent, and Rio Tinto dropped 2.8 per cent as the geopolitical uncertainty weighed on the global economic outlook. Gold miners fared worse. Northern Star lost 4.4 per cent and Evolution Mining fell 5.7 per cent as inflation concerns sent safe-haven gold prices lower—a counterintuitive move that suggested traders were rotating out of defensive positions. The real casualty was Elders, the agribusiness company, which tumbled 22.9 per cent despite posting a rise in profit to $39.65 million. The company warned that the Middle East conflict posed ongoing risks, with elevated diesel prices threatening its supply chain and higher fuel and fertiliser costs creating headwinds in the first half.
Energy stocks were the day's winners. Woodside Energy rose 2.5 per cent, Santos added 2.4 per cent, Ampol advanced 2.1 per cent, and Viva Energy jumped 2.9 per cent as crude prices climbed. Financial stocks were mixed: Commonwealth Bank added 0.3 per cent while Westpac was flat, but National Australia Bank lost 0.8 per cent and ANZ Bank shed 0.2 per cent. Technology stocks showed little conviction, with WiseTech up 0.4 per cent, Xero down 1.6 per cent, NEXTDC falling 2 per cent, and Technology One 0.3 per cent lower. The Australian dollar weakened to US71.23¢.
Wall Street had already stumbled on Friday, with the S&P 500 falling 1.2 per cent from its all-time high set the day before. The Dow Jones dropped 537 points, or 1.1 per cent, and the Nasdaq composite sank 1.5 per cent from its own record. Technology stocks, which had powered markets to those heights for much of the year, reversed sharply. Nvidia, the stock that had become synonymous with the AI boom, dropped 4.4 per cent and was the heaviest weight on the S&P 500, despite having gained more than 26 per cent for the year so far.
Brian Jacobsen, chief economic strategist at Annex Wealth Management, said markets had "pushed into overbought territory." While strong corporate profits and a durable US economy remained intact, he cautioned that "the path is unlikely to be smooth. Periods like this call for discipline more than hope." The tension between corporate resilience and consumer anxiety was becoming harder to ignore. Many large US companies reported that customers had continued spending despite higher petrol prices, yet surveys showed households feeling discouraged about the economy and the mounting pressures from the war and tariffs.
Traders have now abandoned virtually all expectations that the Federal Reserve will cut interest rates this year. Some are even betting the Fed may hike rates in 2026. Better-than-expected reports on US industrial production and New York manufacturing helped push yields higher, but the underlying message was clear: inflation remains sticky, geopolitical risk is real, and central banks will likely keep rates elevated longer than markets had hoped just weeks ago.
Notable Quotes
Markets have pushed into overbought territory. The path is unlikely to be smooth. Periods like this call for discipline more than hope.— Brian Jacobsen, chief economic strategist at Annex Wealth Management
For Iran, the Clock is Ticking, and they better get moving, FAST, or there won't be anything left of them. TIME IS OF THE ESSENCE!— President Donald Trump, posted on social media Sunday
The Hearth Conversation Another angle on the story
Why did gold miners fall when gold is supposed to be a safe haven in uncertain times?
Because traders weren't buying safety. They were selling everything to raise cash and reassess. When inflation fears spike and bond yields jump, investors rotate out of defensive positions and into whatever pays them a real return. Gold doesn't pay interest.
So the energy stocks rising—that's just because oil got more expensive?
Partly. But it's also because the market is pricing in a longer period of elevated energy costs. If the Strait of Hormuz stays disrupted, oil stays high, and energy companies make more money. It's a bet that the conflict doesn't resolve quickly.
What's the real story underneath all this—the thing that scared traders most?
That inflation isn't going away and central banks won't be able to cut rates to rescue markets like they have before. If rates stay high, expensive tech stocks become less attractive. If rates go higher, they become toxic.
Why does Elders fall 22 per cent when it actually made more profit?
Because profit doesn't matter if your costs are spiraling and you can't control them. Diesel and fertiliser prices are eating into margins. The company was saying: we made money, but we're not sure we can keep doing it if this war drags on.
Is this the beginning of something bigger?
It's a correction, not a crash. But it's a warning that the easy money is over. Markets got ahead of themselves. Now they're repricing risk—and risk is suddenly very real.