ASX 200 Slumps 1.06% as Trump’s Hawkish Iran Remarks Trigger Oil Spike and Risk-Off Selloff

SYDNEY — Australian shares retreated Thursday, with the benchmark S&P/ASX 200 closing down 92.3 points, or 1.06%, at 8,579.5 after erasing early gains in a volatile session driven by renewed geopolitical tensions in the Middle East.

The drop came after U.S. President Donald Trump signaled in a national address that American forces would continue striking Iran “very hard” and “finish the job,” dashing hopes for a quick resolution to the conflict that has roiled global markets for weeks. Oil prices surged on the comments, with Brent crude jumping about 5-6% toward US$107 a barrel, while U.S. futures weakened and risk assets came under pressure across Asia and beyond.

Trading on the ASX was bumpy. The index opened higher, briefly climbing above 8,700 in morning trade as it rode momentum from Wednesday’s strong 2.24% rebound to 8,671.8. But sentiment flipped sharply after Trump’s midday remarks, sending the S&P/ASX 200 into negative territory and closing near session lows at 8,579.5. Volume reached 879.84 million shares, according to market data.

Nine of the 11 sectors finished in the red. Information technology led decliners, tumbling 3.93%, followed by materials, which shed 2.77% amid mixed commodity signals. Consumer staples and utilities were the only bright spots, gaining 1.32% and 0.92% respectively as defensive plays attracted some buying.

Energy stocks showed resilience in spots thanks to the oil rally. Karoon Energy jumped 6.53% to $2.12, while some gold miners also found support even as the broader gold price eased slightly. Alcoa rose 4.72%, Greatland Resources gained 4.68%, and Northern Star Resources added 3.85%. On the losing side, technology and mining names weighed heaviest, with notable decliners including HUB24, Mineral Resources and several IT firms.

The pullback erased roughly half of Wednesday’s gains, which had been fueled by optimism that the Iran conflict might wind down. That session marked the ASX 200’s strongest performance in a year, adding about $68 billion in market value as 10 of 11 sectors advanced.

Broader context points to ongoing strain. The index has now given back significant ground since hitting an all-time high near 9,202 in late February. March delivered one of the worst monthly performances in years, with the ASX 200 falling around 7.5-7.8% — its steepest drop since June 2022 — as escalating Middle East hostilities, surging oil prices and inflation worries rattled investors. Roughly $190-300 billion in market value has been wiped out since the conflict intensified.

Analysts pointed to multiple headwinds. Higher oil threatens to stoke inflation in Australia, where the Reserve Bank of Australia (RBA) is already monitoring sticky price pressures. Markets have priced in a higher chance of RBA rate hikes if energy costs keep climbing, adding pressure to rate-sensitive sectors such as banks and property. Westpac Strategy noted that escalation risks remain “explicit,” while Morgan Stanley has warned that sustained oil above US$100 could add around 70 basis points to headline inflation.

Locally, weaker trade data added to the cautious mood. Australia’s imports fell 3.2% month-on-month in February to a seven-month low, reflecting softer demand and trade uncertainty amid global disruptions.

The All Ordinaries index fared worse, dropping 1.25% to 8,774.9. The small ordinaries fell 2.50%, and the tech-heavy All Tech index slid 3.51%. Resources dropped 2.42%.

Geopolitical developments dominated the narrative. The U.S.-Iran conflict, which escalated with strikes in recent weeks, has disrupted shipping through the Strait of Hormuz — a critical chokepoint carrying about one-fifth of global oil supply. Shipping companies including Maersk have suspended routes, and oil prices have remained elevated, creating a classic stagflationary risk mix of higher energy costs and slower growth.

Trump’s remarks provided no clear de-escalation timeline, prompting investors to lock in profits and reduce exposure to growth-oriented stocks. Tech names suffered as rising bond yields weighed on future earnings valuations. Miners faced pressure from uncertainty over China’s energy security and demand outlook, even as some iron ore and base metal signals showed resilience.

Defensive and commodity-linked plays offered limited insulation. Gold traded near elevated levels but eased modestly during the session, supporting select gold producers such as Newmont and Evolution Mining earlier in the week. Energy firms with exposure to oil benefited from the price spike, though broader market nerves capped gains.

Looking ahead, the ASX will be closed Friday for Good Friday and Monday for the Easter public holiday, reopening Tuesday. That lull gives investors time to digest any further developments from Washington or Tehran. Markets will watch for signs of diplomatic progress or further military action, as well as upcoming Chinese economic data and any RBA commentary on inflation risks.

Economists remain divided on the near-term outlook. Some see selective buying opportunities in undervalued resource and energy names if the conflict stabilizes, while others warn of more downside if oil sustains above US$100-105 and forces central banks to tighten or hold rates higher for longer. The OECD has flagged Australia as potentially facing one of the higher inflation readings among advanced economies.

Year-to-date, the S&P/ASX 200 is down about 1.55%, with a one-year return still positive at around 8.13% despite recent volatility. The 52-week range spans from roughly 7,169 to 9,202.

Corporate highlights were muted amid the macro focus, though PEXA continued to face pressure from a regulatory review, and other individual stocks moved on company-specific news.

Investors will also monitor Wall Street’s reaction when U.S. markets reopen, along with any fresh comments from the Trump administration. Asian markets, including Hong Kong’s Hang Seng, also closed lower Thursday as the risk-off mood spread.

The Australian dollar was little changed near 69 U.S. cents, reflecting mixed signals from commodities and rates.

While the session highlighted the ASX’s sensitivity to global events — particularly energy shocks and U.S. policy — analysts caution that prolonged Middle East instability could weigh on consumer confidence, business investment and household spending in Australia. Prime Minister Anthony Albanese announced up to A$693 million in cheap loans to help ease fuel costs for households and businesses, offering a small domestic buffer.

For now, the market appears to be pricing in heightened uncertainty rather than outright panic. But with oil volatile and central banks on alert, the path forward for the ASX 200 in April remains clouded by geopolitical crosscurrents.