Concerns over a potential Middle East war that undermined United States stocks on Friday are set to spread to Australia, with shares expected to fall by almost 1% when the market opens on Monday.
The S&P/ASX 200 share price index June contract last traded 20 points or 0.9% below its previous settlement at 8,532 points, at the time of writing.
U.S. stocks slid and oil and gas prices jumped on Friday (Saturday AEST) after Iran launched missiles at Israel in response to intensive Israeli strikes aimed at crippling Tehran's ability to build nuclear weapons.
The Dow Jones Industrial Average dived 1.8%, the S&P 500 lost 1.1% and the Nasdaq Composite fell 1.3%.
Oil prices surged nearly 7% on fears the conflict could disrupt crude supply from the Middle East. Gold rose 1.5% on recognition of its traditional safe haven status in times of uncertainty.
“It looks as though we could be in for a full-blown military conflict," Brown Brothers Harriman Senior Markets Strategist Elias Haddad was quoted by Reuters as saying.
This positions the Australian market for a second straight session of falls, with the S&P/ASX 200 losing 0.2% to 8,547.4 on Friday.
Concerns about higher oil prices stoking inflation pushed bond yields higher around the world with Australia following suit, as 10-year rates rose 1.14% to 4.237% and two-year rates gained 0.91% to 3.313%.