ASX 200 edges higher as Energy stocks rally on rising oil prices

Image Source : Krish Capital Pty Ltd

Index Update: Australian shares edged slightly higher on Monday, supported by a rally in energy stocks following a spike in oil prices. The S&P/ASX 200 index ended the session up just 1.00 point, closing at 8,548.40. Over the past five trading days, the benchmark has risen 0.38% and now sits 1.05% below its 52-week high. Market performance was mixed, with five sectors closing higher and six lower. Energy led the gains, surging 5.21% on the day and posting a 12.04% increase over the past week, driven by rising crude prices amid escalating Middle East tensions.

Macro Update: The U.S. dollar strengthened on Monday, buoyed by rising geopolitical tensions between Israel and Iran, which spurred demand for traditional safe-haven assets. Investors grew increasingly cautious amid intensifying conflict, after Iran retaliated against Israel’s largest-ever military strike on Iranian assets. The move triggered a broad flight to safety on Friday, with investors shifting into the dollar and gold, while oil prices surged on fears of broader supply disruptions in the Middle East.

Markets are bracing for a highly consequential week, with geopolitical developments and central bank decisions in sharp focus. The spotlight is firmly on the Federal Reserve, which is set to conclude its two-day policy meeting on Wednesday. While the Fed is widely expected to hold its benchmark interest rate steady, market participants will be watching closely for signals on the timing of any potential rate cuts.

Top Market Movers: Energy stocks led the charge on Monday, with Deep Yellow Limited (ASX: DYL) surging 21.24% to AUD 1.570, followed by Boss Energy Ltd (ASX: BOE), up 17.66% to AUD 4.330, and Paladin Energy Ltd (ASX: PDN), which gained 15.56% to AUD 7.280. On the downside, miners lagged, with Northern Star Resources Ltd (ASX: NST) falling 8.21% to AUD 20.680, Evolution Mining Ltd (ASX: EVN) dropping 8.04% to AUD 8.460, and Westgold Resources Ltd (ASX: WGX) down 7.55% to AUD 3.060.

Commodity Update: The dollar strengthened on Monday as escalating Israel-Iran tensions fueled safe-haven demand, with investors cautious ahead of key central bank meetings. Fears of a wider conflict and potential disruption at the Strait of Hormuz, vital for global oil transit, heightened market risk. Gold rose 0.14% to USD 3,458.00, silver edged up 0.10% to USD 36.39, and copper gained 0.10%. Brent crude climbed 0.50% to USD 74.59, extending gains amid rising supply concerns in the Middle East.

Our Stance: ASX shares edged higher on Monday, led by a rally in energy stocks fueled by rising oil prices amid escalating Israel-Iran tensions. This geopolitical unrest is creating market uncertainty, driving investors toward safe-haven assets like the U.S. dollar and gold. Meanwhile, all eyes are on the Federal Reserve’s upcoming policy meeting, where rates are expected to remain steady, but signals on future rate cuts could influence market direction. Given this backdrop, investors should prepare for continued volatility as markets weigh supply concerns, inflation pressures, and global stability.

In the latest session, the S&P/ASX 200 Index edged higher by 1.00 points, closing at 8,548.40. This modest gain was marked by a small bullish candlestick pattern, reflecting underlying positive sentiment. The index continues to trade above its 21-period Simple Moving Average (SMA), which supports the short-term bullish outlook. Furthermore, its position above the 21-period SMA on the weekly chart underscores a solid foundation for potential long-term gains. A key level to monitor is the resistance at 8,620.20. A decisive breakout above this barrier could signal a meaningful upward shift and strengthen the positive market view. Sustaining this momentum will largely depend on the index’s ability to clear this resistance, potentially unlocking further upside and boosting investor confidence in the near term.