Australian shares extend losses amid geopolitical tensions

Image Source : Krish Capital Pty Ltd

Index Update: The Australian share market closed slightly lower on Tuesday, following a volatile session marked by geopolitical uncertainty. The S&P/ASX 200 slipped 7.10 points to end at 8,541.30, after US President Donald Trump’s social media post urging evacuation of Tehran triggered nervous trading across Asian markets. The benchmark index has now declined 0.53% over the past five sessions and remains 1.13% below its 52-week high. Market sectors ended mixed, with seven of eleven finishing in the red. A-REITs led gains, rising 0.36% on the day and 0.47% over the week.

Macro Update: The recent U.S.-China trade truce in London has left security export restrictions unresolved. Issues over rare earth magnets and advanced AI chip controls remain in place. The U.S. may extend tariffs beyond 10 August, delaying a comprehensive trade deal between the two countries.

On the other hand, the US Federal Reserve is in a tough spot ahead of this week’s meeting. Inflation remains stubborn, yet the job market shows signs of weakening. Cutting interest rates could ease unemployment but risk higher inflation, especially with new tariffs in play. Holding rates steady might help reduce inflation but worsen job losses.

Top Market Movers: Bellevue Gold (ASX: BGL) led the gainers on Tuesday, rising 6.99% to AUD 0.995, followed by Deep Yellow (ASX: DYL), up 5.73% to AUD 1.660, and Paladin Energy (ASX: PDN), which gained 4.40% to close at AUD 7.600. On the losing side, Healius (ASX: HLS) dropped 3.73% to AUD 0.775, James Hardie (ASX: JHX) fell 2.88% to AUD 38.770, and Lifestyle Communities (ASX: LIC) slid 2.78% to AUD 6.650.

Commodity Update: The U.S. dollar edged slightly on Tuesday, while most currencies traded within narrow ranges amid persistent Middle East tensions and anticipation of key central bank decisions. Gold slipped 0.13% to USD 3,412.45, silver inched up 0.02% to USD 36.47, and copper declined 0.32% to USD 9,679.35. Brent crude rose 0.30% to USD 73.46 as President Donald Trump warned Tehran over the Israel-Iran conflict, which fueled supply disruption concerns.

Our Stance: The Australian share market’s muted performance reflects growing investor anxiety over escalating geopolitical risks. With inflation remaining sticky and the global economy slowing, investors are increasingly turning defensive. Commodity volatility and Brent crude’s uptick point to supply concerns, while interest rate ambiguity adds further pressure. Although A-REITs showed some resilience, broader sentiment remains fragile. 

The S&P/ASX 200 Index faced a challenging session, slipping 7.10 points and forming a small bearish candlestick pattern, accompanied by higher trading volume. Despite this, the index remains above its 21-period Simple Moving Average (SMA), which serves as a critical support level. On the daily chart, key support is clearly defined at around 8,457.31, a level market participants will closely watch. Holding above this threshold could help consolidate recent gains and strengthen confidence in the index’s upward trajectory. Importantly, the index’s position above the 21-period SMA on the weekly chart further supports the potential for sustained momentum over the longer term. This alignment of technical indicators across multiple timeframes reinforces the bullish outlook and suggests the index may continue to display resilience amid market fluctuations.