Our local share market was looking steady earlier today. Then everything changed.
After starting the day higher, the S&P/ASX 200 Index (ASX: XJO) has turned lower and is now down 0.61% to 8,618.1 points.
The index had climbed as high as 8,723 earlier in the session before sellers stepped in.
The sudden drop came after fresh comments from US President Donald Trump about the conflict with Iran, which unsettled global markets.
Instead of giving investors confidence that the fighting may be winding down, his latest remarks suggested the conflict could continue for up to three weeks.
That has made investors nervous again, especially heading into the Easter break.
Image source: Getty Images
Oil jumps again as market nerves return
The biggest move following Trump's comments has been in the oil market.
Brent crude oil jumped back above US$105 a barrel after Trump's comments raised concerns the conflict could drag on.
Rising oil prices are already pushing up costs right across the economy, which is now feeding into local market sentiment.
Higher fuel, freight, and shipping costs have been squeezing profit margins for retailers, transport businesses, airlines, and many other companies that rely heavily on moving goods and people.
It has also added to inflation worries and reduced hopes for interest rate cuts, putting extra pressure on company valuations.
This has helped push the benchmark index back into the red after its earlier gains.
Selling spreads across the ASX 200
The weakness is showing up across most of the market.
Selling has also become more widespread, with 118 stocks falling compared to 78 rising in the ASX 200.
Large mining stocks have been among the main drags on the index.
BHP Group Ltd (ASX: BHP), Rio Tinto Ltd (ASX: RIO), and Fortescue Ltd (ASX: FMG) are all in the red as investors weigh what higher oil prices and renewed geopolitical risks could mean for global growth.
Energy shares are offering some support as oil prices rise, but that has not been enough to offset the broader weakness.
Even gold has pulled back after rising earlier, which shows how quickly investors are changing positions as sentiment shifts.
Foolish Takeaway
The ASX 200 had been building on hopes that the Middle East conflict was moving closer to an end.
Instead, the latest headlines have sent oil prices higher and brought uncertainty back into the market.
Investors are still reacting quickly to every development, particularly anything that could affect inflation, interest rates, and the outlook for global growth.
Until there is a clearer direction on how the conflict ends, this kind of volatility looks here to stay.
