ASX 200 Retreats Amid Iran Strike Fears, Weekly Decline at 0.49%

Image Source : Krish Capital Pty Ltd

Index Update: The Australian share market recorded its lowest level in over two weeks on Friday, with the S&P/ASX 200 falling 18.20 points or 0.21% to 8,505.50, as investors grew cautious over rising geopolitical tensions. The index dropped 0.49% for the week and now sits 1.55% below its 52-week high. Market sentiments were affected by Donald Trump's claims that the U.S. may strike Iran within two weeks, despite Wall Street being closed yesterday for the Juneteenth holiday.  Among the sectors on the ASX, utilities led gains, rising 0.74% for the day, while six of the eleven sectors declined.

Macro Update: US President Trump has finalised a trade deal with the United Kingdom this week, encouraging the European Union to seek a similar agreement despite recent negotiation challenges. The EU now expects a 10% reciprocal tariff baseline, following the US-UK deal that kept existing tariffs in place. However, Trump has threatened tariffs of up to 50% on EU imports once the current tariff pause expires on July 9. Meanwhile, Canada’s Prime Minister Mark Carney warned of potential tariff hikes on US steel and aluminum imports by late July. At the G7 this week, both leaders remained optimistic about reaching a trade deal.

Top Market Movers: Top gainers on the ASX on Friday included ZIP Co Limited (ASX: ZIP), which rose 5.90% to close at AUD 2.87, followed by NRW Holdings Limited (ASX: NWH), up 5.04% at AUD 2.92, and Lifestyle Communities Limited (ASX: LIC), which gained 4.37% to AUD 6.69. Among the biggest decliners, Mineral Resources Limited (ASX: MIN) dropped 6.17% to AUD 20.69, Clarity Pharmaceuticals (ASX: CU6) fell 5.46% to AUD 2.08, and Pilbara Minerals (ASX: PLS) slipped 5.02% to AUD 1.23.

Commodity Update: The dollar is poised for its biggest weekly gain in over a month amid heightened Middle East tensions, driving demand for safe-haven assets. Gold dropped 1.04% to USD 3,372.40, silver slid 1.55%, and copper eased 0.10%. Brent crude fell 1.90% to USD 77.33 after the White House said President Trump would decide on Iran-Israel war involvement in two weeks, though crude remained on track for a third consecutive weekly gain.

Our Stance: The ASX 200’s recent retreat reflects growing investor caution amid escalating geopolitical tensions, particularly concerns over potential U.S. military action against Iran. While this has pressured markets in the short term, defensive sectors like utilities have provided some support. Looking ahead, the outcome of ongoing trade negotiations between the U.S., U.K., and EU will remain key drivers, alongside developments in Middle East stability. Commodity markets and safe-haven assets will also be closely watched. Investors should prepare for continued volatility but consider opportunities in sectors resilient to geopolitical and trade uncertainties.

The S&P/ASX 200 index endured a challenging session, closing down 18.20 points and forming a bearish candlestick pattern amid higher trading volume. Despite the pullback, the index remains above its 50-period Simple Moving Average (SMA), a critical support level on the daily chart. Notably, key support is seen near 8,420.50, a level closely watched by market participants. Holding above this threshold could help consolidate recent gains and reinforce confidence in the index’s upward path. Additionally, the index’s position above the 21-period SMA on the weekly chart signals the potential for sustained bullish momentum. The alignment of these technical indicators across timeframes points to resilience and a broadly positive outlook despite short-term volatility.