ASX falls as oil hits new wartime high, Woolies slumps on inflation warning

The Australian sharemarket extended its losing streak on Thursday as Brent oil soared to a wartime high after a report that US President Donald Trump is set to receive a briefing on new military options for action in Iran, signalling the potential for fresh escalation in the Middle East.

The S&P/ASX closed 21.2 points, or 0.2 per cent, lower at 8665.80, its eighth straight day of declines. Grocery giant Woolworths was among the session’s biggest losers after the nation’s largest supermarket chain warned of rising inflation pressures because of the war on Iran.

The Australian dollar was flat at US71.16¢ after local inflation figures bolstered bets for further rate hikes by the Reserve Bank. The ASX fell 0.3 per cent on Wednesday.

Brent crude, the global oil benchmark, surged as high as $US126 a barrel to the highest intraday level since June 2022 and traded at $US123.30 in late afternoon, while West Texas Intermediate traded near $US110. US Central Command’s Admiral Brad Cooper will meet Trump on Thursday, suggesting a resumption of combat operations are seriously under consideration, according to an Axios report, which cited two unnamed people.

The US military has asked for hypersonic missiles to be sent to the Middle East, which would mark the first time the country has deployed those weapons. Trump earlier told Axios that he would not lift a naval blockade on Iranian ports until he secures a nuclear deal with Tehran, while the administration is also seeking the forfeiture of two Iran-linked oil tankers that were seized by naval forces.

“Trump has ripped away the security blanket the market was clinging to — the hope that the war was about to end,” said Robert Rennie, head of commodity research at Westpac. “Traders are now being forced to confront a much uglier reality: both sides still think they are winning, neither side has a clear incentive to negotiate and energy prices are starting to accelerate higher.”

Consumer staples were among the hardest hit in Thursday’s session, led by Woolworths, which dived 7.8 per cent after the grocery giant said full-year profits from its Australian supermarkets would come in at the low to medium end of its forecasts, as the war in the Middle East raised fuel and other supply costs. The warning also weighed on its biggest rival Coles, which lost 3.6 per cent.

Woolworths said food sales at its Australian supermarkets rose 6.5 per cent in March and April so far and pledged to keep a lid on costs and boost productivity to help mitigate cost pressures, but Woolworths chief executive Amanda Bardwell warned that “higher fuel costs and secondary effects are likely to have an increasing inflationary impact as we move through the calendar year”.

“The conflict in the Middle East is creating greater uncertainty for our customers, suppliers and team at a time when cost-of-living pressures are already acute,” Bardwell said in a statement to the ASX.

Metcash, which supplies independent supermarket chains such as IGA, fell 2.2 per cent, while shares of bottleshops owner Endeavour lost 1.2 per cent.

The materials sector was also sharply lower, with mining giants BHP down 2.2 per cent, Rio Tinto shedding 2 per cent and Fortescue Metals losing 2.8 per cent. Gold producers Northern Star (down 2.7 per cent) and Evolution Mining (down 5.3 per cent) slumped as gold held a three-day loss after the Federal Reserve kept US interest rates steady overnight. It said the war was clouding the economic outlook. Bullion was near $US4550 ($6387) an ounce, having lost 3.4 per cent this week.

South32 shares dived 5.4 per cent after the silver miner said costs for its Taylor zinc-lead-silver project in Arizona would blow out to about $US3.3 billion ($4.6 billion), blaming higher costs for steel and concrete, revised shaft construction costs, higher inflation and US tariffs. Production would also start later than previously flagged, it said.

On the flipside, energy stocks had another strong day on the back of the oil rally amid concerns that the impasse in US-Iran talks could last for a while. That could keep Persian Gulf energy products from reaching the rest of the world for weeks or, in a worst-case scenario, months.

Shares in Woodside Energy (up 1.5 per cent) and Santos (up 3 per cent) rose sharply, and refiners Ampol and Viva Energy added 1.7 per cent and 2.9 per cent, respectively. Alternative fossil fuel producers Yancoal (up 1.9 per cent) and Whitehaven Coal (up 2.2 per cent) also gained.

Tech stocks benefited some encouraging results from US tech giants overnight, with local software maker WiseTech Global up 3.4 per cent and data centre operator NextDC gaining 1.7 per cent.

Exchange operator ASX Ltd. jumped 5.1 per cent after naming Darren Yip, who oversees its markets and listings divisions, as its interim boss amid a strategic review to lift risk management and governance practices.

On Wall Street overnight, shares seesawed as investors juggled the spiking crude prices and the Federal Reserve’s interest rate announcement, while a quarter of high-profile earnings dropped after the closing bell. The S&P 500 closed flat, the Dow Jones lost 0.6 per cent and the Nasdaq composite edged up.

The Fed left its benchmark interest rate unchanged for the third straight meeting but signalled it could still cut rates in coming months, a move that attracted the most dissents since October 1992. Three officials dissented in favour of removing the reference to a future cut, while a fourth, Stephen Miran, dissented in favour of an immediate rate cut.

Outgoing Fed chair Jerome Powell said he would stay on the Fed’s board after his term as chair ends for an “undetermined period of time”. The Senate Banking Committee earlier approved Powell’s successor as chair, Trump appointee Kevin Warsh, on a party-line vote.

After Wall Street’s closing bell, Alphabet topped Wall Street estimates for quarterly revenue growth at its cloud computing unit, driven by sustained enterprise spending on artificial intelligence infrastructure. Its shares were up about 4 per cent in extended trading.

Alphabet’s total revenue rose 22 per cent to $US109.9 billion in the first quarter, compared with an estimate of $US107.2 billion, according to LSEG data.

Facebook owner Meta Platforms raised its annual capital expenditure forecast, doubling down on its decision to plough billions into artificial intelligence infrastructure even as it seeks cost savings via planned layoffs. Its shares slumped 5 per cent in after-hours trading.

Microsoft shares dropped 2 per cent after posting a third-quarter revenue of $US82.9 billion.

Amazon shares slid 2.3 per cent on its results, with total net sales up 17 per cent to $US181.5 billion.

Earlier, the US stock market remained largely resilient as more companies joined the procession reporting stronger profit growth for the start of 2026 than analysts expected.

With AP, Bloomberg, Reuters

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