Shares slip, oil holds gains on Red Sea blockade threat

Australia’s share market has headed lower after banks dragged and energy stocks rallied, as the broadening conflict in the Middle East weighed on confidence.

The benchmark S&P/ASX200 fell 27.6 points by midday on Tuesday to be down 0.31 per cent to 8,763.7, as the broader All Ordinaries lost 29.3 points, or 0.33 per cent, to 8,945.4.

“In the Middle East, the US and Iran continued to exchange blows and hawkish rhetoric, while Yemen’s Iran-aligned Houthis announced a naval blockade on Saudi vessels through the Bab al-Mandeb Strait,” IG analyst Tony Sycamore said.

“This raises fresh risks to global energy supplies if the threat is followed through upon. 

“However, reports of a potential 10-day ceasefire proposal offered some hope of de-escalation, which helped limit the damage.”

Local energy stocks gained 0.5 per cent as oil prices clung to their recent gains, with the Brent benchmark trading near $US88.70 a barrel.

It was a messier story at a sector level, with Woodside up 1.5 per cent, while Santos lost 1.3 per cent and Yancoal rallied for a second session, up more than nine per cent for the week after a strong June quarter update.

The heavyweight financials sector fell 0.6 per cent, tracking with losses in the big four banks that were led by slumps for Westpac and ANZ.

IT stocks outperformed the broader market, surging 1.8 per cent on the back of strong performances from Megaport, Technology One and data centre player NextDC, which jumped 4.3 per cent as its contracted capacity grew by more than a tenth since April.

The basic materials sector eased roughly 0.2 per cent, as Rio Tinto and Fortescue dipped while BHP traded about flat at $57.54, as copper prices improved but iron ore futures lost ground.

Gold miners were broadly higher, the sub-index improving by almost one per cent in early trade as the precious metal firmed to $US4,022 ($A5,741) an ounce.

Consumer-facing segments were mixed, with discretionaries down 0.6 per cent as Wesfarmers and Eagers Automotive sold off, while staples edged 0.1 per cent higher as Coles and Woolworths traded roughly flat.

Health care stocks were under pressure, down more than one per cent as CSL, Pro Medicus and Sigma Health weighed.

In company news, Telix Pharmaceuticals shares improved after its June quarter revenue grew by more than a fifth in annual terms to $US247 million ($A352.6 million).

KPMG has appointed chief financial officer John Sams as its new CEO, following Andrew Yates’ resignation in May in the wake of the company’s audit leak scandal.

The Australian dollar was buying 70.06 US cents, up from 69.90 US cents on Monday at 5pm.