The Australian sharemarket opened lower on Tuesday after escalating tensions in the Middle East sent oil prices soaring and prompted a broad sell-off in New York overnight.
By 10:25 am AEST (12:25 am GMT), the ASX 200 index was trading 0.4% lower at 8,776.5.
The cautious trade follows a volatile offshore session on Wall Street on Monday (Tuesday AEST) after United States President Donald Trump intensified the war with Iran by announcing he would reimpose a blockade on Iranian ports.
The Dow Jones Industrial Average dropped 0.3%, the S&P 500 lost 0.8%, and the Nasdaq Composite dived 1.6% as the ramp-up in the conflict dampened investors’ appetite for risk assets.
"(Stocks) really reached a high at the very end of May, driven mainly by semiconductor(s)," GLOBALT senior portfolio manager Thomas Martin was quoted as saying in a Reuters article.
"When you move something this far, this fast, you invite the question: how sustainable is it?
"If the market were cheap, it'd be one thing. Now there's less cushion and there continues to be a lot of unknowns."
Trump said he would impose a 20% toll on shipping in the Strait of Hormuz, prompting fears of disruptions to oil supplies, which sent the price of Brent crude oil up 9%.
This is expected to feed into the ASX today with energy stocks likely to rise in defiance of the overall downward trend.
The Australian market had ended little changed on Monday with the ASX 200 edging up 2.5 points to 8,808.5 as strength in energy stocks offset weakness in technology and materials.
In fixed interest markets, yields on Australian Government bonds rose, with two-year rates up 0.22% to 4.565% and 10-year rates 0.60% higher at 4.889% at the time of writing.
