The Australian share market experienced a downturn, with the S&P/ASX 200 Index dropping 36.9 points, or 0.4%, to 9039.1 in the initial minutes of trading. This decline was largely attributed to renewed strikes in the Middle East, which pushed oil prices above $US90 a barrel and subsequently triggered a significant spike in bond yields globally. Six out of 11 industry groups on the ASX 200 fell, with consumer discretionary stocks leading the sell-off.
The market's reaction followed a subdued session on Wall Street, where the S&P 500 Index closed down 0.3%. This global anxiety stemmed from US forces striking an island in the Strait of Hormuz and Iran retaliating with attacks on the United Arab Emirates and Jordan, marking the first exchange of fire in approximately a month. Brent crude settled near $US90 a barrel on Monday, while US crude extended its gains in early Asian trading to over $US86.30 a barrel after a 2.8% advance in the prior session.
Fears of inflation, fueled by the escalating energy costs, caused 10-year US bond yields to climb three basis points to 4.75%, reaching their highest level since January 2025. This upward pressure on US yields in turn pushed Australia's 10-year bond yield up to 5.17%, a level not seen in over a decade. The broader trend of surging global borrowing costs was also noted, with 30-year US Treasuries reaching their highest since 2007 in mid-August 2026, and similar patterns observed in French and German bond markets.
