Australia Market ends in green

The Australian share market recovered from early losses to close at the best levels of the day with a small gain on Monday, 06 January 2020, helped by gains energy stocks after global oil prices rose by as much as 3.5% at the weekend. However, market gains were marginal, on concerns over escalating tensions in the Middle East. At closing bell, the benchmark S&P/ASX200 index inclined by 2.21 points, or 0.03%, to 6,735.71, while the broader All Ordinaries rose 2.20 points, or 0.03%, to 6,857.40.

Investors were concerned about worsening U.S.-Iran relations after news that the U.S. military had killed Qassem Soleimani, the head of Iran's Islamic Revolutionary Guard's Quds Force. The strike also killed Abu Mahdi al-Mohandes, the deputy head of the Popular Mobilization Forces, which is an umbrella for dozens of militias that are part of the Iraqi security apparatus but include factions that swear allegiance to Iran's supreme leader.

 

Tensions in the Gulf region escalated with Tehran vowing to avenge the death of General Soleimani and its allies in Iraq pressing to expel US troops from the country. Iraqi Prime Minister Adel Abdul-Mahdi condemned the overnight strike, calling it a flagrant breach of the terms underwriting the presence of US forces in the country. Iran's supreme leader, Ayatollah Ali Khamenei, declared three days of mourning for Soleimani's death and said that a hard revenge awaits criminals, responsible for the attack.

The Energy sector was the most improved after global oil prices rose by as much as 3.5% at the weekend, following a US air strike that killed a top Iranian military commander. Growing tensions between the US and Iran raised the prospect of disruptions to oil supplies from the Middle East. As a result the Brent crude price rose by US$2.35 or 3.5% to US$68.60 a barrel, and the US Nymex price rose by US$1.87 or 3.1% to US$63.05 a barrel. Santos (STO), Oilsearch (OSH) and Woodside Petroleum (WPL) were all higher by 1.5-2.5% at close of trade today.

The increased geopolitical tensions also boosted gold prices which pushed miners of the yellow metal higher. Evolution Mining (EVN) closed up by 6.8%, Newcrest Mining up by 3.9 %, Saracen Minerals (SAR) ahead by 2.6 % and St Barbara Limited (SBM) closed up by 2.9%.

CURRENCY NEWS: The Australian dollar, sensitive to shifts in broader risk appetite, eased against the U.S. dollar on Friday. The Aussie dollar held between US69.30 cents and US69.65 cents and was near the US69.40 mark around the time of close of market.

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