The S&P/ASX 200 Index (ASX: XJO) is kicking of the week with a whimper.
In morning trade on Monday, the benchmark Aussie index is down 1.6% at 8,294 points.
The ASX 200 isn't getting any help from the two biggest listed Aussie stocks either. BHP Group Ltd (ASX: BHP) shares are down 2.6%, and Commonwealth Bank of Australia (ASX: CBA) shares are down 1.1% today.
Taking a look at some of the key sectors, the S&P/ASX All Technology Index (ASX: XTX) is down 1.6% while the gold miners are doing it tougher. Amid ongoing pressure on the gold price, the S&P/ASX All Ordinaries Gold Index (ASX: XGD) is down 6.1%.
As you might expect with the global oil price surge, the S&P/ASX 200 Energy Index (ASX: XEJ) is one of the few bright points, up 0.2%. Woodside Energy Group Ltd (ASX: WDS) shares are up 0.8%.
Here's what's happening.
Image source: Getty Images
Why is the ASX 200 tumbling today?
The Aussie stock market is following US markets lower today.
On Friday, the S&P 500 Index (SP: .INX) closed down 1.5%, while the tech-heavy Nasdaq Composite Index (NASDAQ: .IXIC) ended the day down 2%.
US and ASX 200 investor concerns are mounting that the war in Iran could spread deeper into the Middle East, with no clear endpoint in sight.
This sees the Brent crude oil price trading at US$112 per barrel today, up more than 84% since 1 January. That, in turn, is fuelling concerns that the resulting inflation will see central banks like the US Federal Reserve turn to raising interest rates in 2026 rather than cutting them as markets have long been pricing in.
And US President Donald Trump didn't ease those concerns, when over the weekend he threatened that the US will "obliterate" Iran's power plants if the nation doesn't reopen the critical Strait of Hormuz shipping route within 48 hours.
What are the experts saying?
Commenting on the selling pressure on the ASX 200 and global stock markets, Stephen Miller, an investment strategy adviser at GSFM in Sydney, said (quoted by The Australian Financial Review), "Markets are starting to wake up to the fact that even if this conflict gets resolved or de-escalates, the impact on oil markets will be longer lasting."
Miller pointed to the 0.10% increase in US Treasury yields as indicative to rising bets on a looming Fed interest rate increase.
"The US bond market finally had a big meltdown," he said. "It's telling you that [investors] are starting to get worried about the ongoing inflation impacts of higher oil prices."
Then there's all the uncertainty thrown up by the open-ended Iran war. There are a few things that equity markets like less than uncertainty.
"The current state of affairs are certainly, I think, more uncertain than I can remember. I think there is, to some degree, more uncertainty now than there was in COVID," Cochlear Ltd (ASX: COH) CEO Dig Howitt said (quoted by the AFR).
Howitt noted:
At least COVID, we sort of knew after the first month or so … what we were dealing with. Here, I think we're still not quite sure exactly what we're dealing with and what the flow-on implications and impacts are.
With today's intraday losses factored in, the ASX 200 remains up 4.4% over 12 months.
