Australian sharemarket suffers massive tumble as escalating Middle East war wipes out $63bn

The Australian sharemarket has suffered a massive tumble amid fears of an escalating war in the Middle East and increased concerns about inflation.

The ASX 200 plummeted 176.1 points, or 1.90 per cent, to 8901.20 — wiping about $63bn from the market.

The broader All Ordinaries toppled 180.1 points, or 1.90 per cent, to 9117.10.

Asian markets also took a dive, with South Korea’s stock exchange halting trade on Wednesday after the Kospi and Kosdaq each plunged almost 10 per cent.

US stocks recovered from major falls early in the day, but ultimately closed in the red — with the Dow Jones down 0.83 per cent, the Nasdaq slipping 1.02 per cent and the S & P 500 dipping 0.94 per cent.

Every sector on the ASX finished in the red on Wednesday, with the biggest drops in materials, real estate and consumer staples.

The Australian dollar is now buying 70 US cents.

In addition to the war in the Middle East between the US/Israel and Iran, Australia’s latest GDP data showed the economy expanded more than economists had forecast at 2.6 per cent in the fourth quarter.

Another interest rate hike from the Reserve Bank later this month in now more likely.

Global X ETFs senior product and investment strategist Marc Jocum said while the ASX would not be completely insulated from a broad sell-off in risk assets, the current geopolitical backdrop had paradoxically created a tailwind.

“Early signs suggest that the war in the Middle East is benefiting sectors naturally exposed to sustained conflict risk and safe-haven demand, including energy, gold and critical materials,” he said.

“Australia’s commodity-heavy index means that when oil spikes, companies like Woodside Energy and Santos Limited respond.

“When gold rallies, companies like Evolution Mining and Northern Star Resources follow suit.

“In many ways, Australia’s ‘old economy’ DNA is functioning as a natural geopolitical hedge.

“Metals critical to the AI infrastructure build out — such as copper, aluminium, lithium — are now benefiting both from heightened geopolitical risk premiums and long-term demand trends, giving Australian miners a tailwind from two directions at once.”

Mining stocks, including gold and iron ore, took a plunge on Wednesday.

West African Resources plummeted 7.39 per cent, Westgold Resources plunged 7.14 per cent, Genesis Minerals declined 6.89 per cent and Newmont fell 6.31 per cent.

BHP dipped 3.5 per cent, Fortescue fell 2.96 per cent and Rio Tinto dropped 1.61 per cent.

But oil fared better, with Woodside up 0.89 per cent and Santos edging up 0.41 per cent.

Among the big four banks, ANZ fell 3.71 per cent, National Australia Bank was down 2.02 per cent, Westpac declined 1.60 per cent and Commonwealth Bank dipped 1.19 per cent.

In corporate news, ARN Media gained 4.35 per cent after The Kyle and Jackie O Show was scrapped following a bombshell from Jackie “O” Henderson saying she could no longer work with co-host Kyle Sandilands.

Treasury Wine Estates fell 5.99 per cent after announcing chief financial and strategy officer Stuart Boxer would retire at the end of September.