Australian shares retreat to 1-week closing low on fresh US-Iran flare-up

Published Thu, May 28, 2026 · 03:20 PM

[SYDNEY] Australian shares closed at their lowest in a week on Thursday (May 28), with most sectors finishing in the red, after fresh US military strikes on Iran clouded the possibility of an imminent peace deal in the Gulf, denting investor risk appetite.

The S&P/ASX 200 index ended down 1.4 per cent at 8,592.90. The benchmark rose 0.7 per cent on Wednesday.

The index’s advance from the previous session lost steam after Reuters reported the US military carried out new strikes in Iran that officials believed posed a threat to US forces and commercial maritime traffic in the Strait of Hormuz.

The development brought to the forefront the shaky progress made by the two countries in peace negotiations, sending oil prices back up by around 4 per cent and fanning concerns about fuel-driven inflation. Data on Wednesday showed Australian consumer prices rose less-than-expected, though core inflation ticked up as firmer oil prices fed through the economy.

“It’s hard to see how the index can achieve the required gains to test the 9,000 (level) again in the short-term, but it would start with a clear resolution to the Middle East conflict,” said Luke Winchester, portfolio manager at Merewether Capital.

Given the deterioration of consumer confidence, the next catalyst may be an RBA rate cut, though the path to that is currently unclear, Winchester added.

Financials fell 1.6 per cent, with all “Big Four” banks shedding between 1.3 per cent and 2.1 per cent.

Miners snapped a five-session rally to finish at a near one-week low, mirroring weaker iron ore and copper prices. BHP and Rio Tinto closed 1.2 per cent and 2.5 per cent lower, respectively. Both stocks logged their weakest sessions in around a week.

Gold miners closed at their lowest since late March, with Northern Star Resources and Evolution Mining tumbling 7.5 per cent and 7.8 per cent, respectively.

Healthcare stocks declined 1.2 per cent while the industrials sub-index fell 0.8 per cent.

New Zealand’s benchmark S&P/NZX 50 index ended 0.2 per cent lower at 13,206.11.

The country unveiled a bare-bones budget ahead of a tightly contested election later this year that focused on preserving fiscal firepower amid rising risks linked to the Iran conflict. REUTERS