It’s a new world for all of us and the stock market that has a big impact on our wealth via our super funds. But what goes down, also bounces back!
When it comes to stocks, what goes up, can come down. That’s what this Iran war has shown as the latest stock market calculations indicate $64 billion has been wiped off our shares. However, this follows a great start to 2026 with our S&P/ASX 200 index up nearly 2% since the start of the year.
That index captures the share price movement of our top 200 listed companies headed by the likes of BHP, CBA, Telstra, Wesfarmers, etc.
What’s more, our market has outperformed the Yanks, with the S&P500, which, of course, houses the 500 most valuable US companies on its stock market, is only up 0.3%. Here we’re talking about Apple, Microsoft, Amazon, Alphabet and so on.
While this $64 billion drop in value is bad news for stock players, it also affects our super balances, as a big percentage of invested funds for the big superannuation funds goes into local and foreign stocks. To be more precise, about 55% of super money goes into stocks, with 23% going to local shares and a big 32% invested in overseas stocks.
Overnight, the negativity seen this week got a break, with European markets closing in positive territory, with the German Dax up 1.74%, the UK’s FTSE 0.8% higher, and the STOXX 600, which captures Europe’s top 600 listed companies, rising 1.37%.
Meanwhile, ahead of the closing bell on Wall Street, US market indexes are all up pretty strongly as well.
So, how come?
Remember fear gripped so many global stock markets. Korea’s index slumped 10%, which is crazy, mad stuff. What has helped a turnaround in sentiment?
Two reasons stand out.
First, the US received some better news about the economy, with the ADP private sector report showing more jobs were created in February than was expected. This follows a better-than-expected growth number for the US services sector.
But these data drops would have less impact on foreign markets, which loved the news that the US navy would support and protect ships carrying oil out of the Strait of Hormuz. Even though there could be insurance issues, President Trump is riding over those concerns, and the impact has been that oil and gas prices fell, which is a big plus for stocks.
Yesterday’s 176-point slump in the S&P/ASX 200 index was strongly driven by the spike in oil prices, as the war threatened oil and gas supplies out of the region. Iran generally produces 3.5 million barrels of oil per day and is the 8th biggest supplier. Iraq, which has stopped its oil works because of the war, is the 7th biggest.
All this threatens the world economy and that’s why stocks have been slumping. And it’s why optimism returned overnight. As a consequence, our futures index — the SFE SPI 200 — is expected to open up 80 points higher at the start of trade.
Of course, if this war drags on and oil tankers are sunk by Iranian forces, then this optimism will disappear.
The Daily Telegraph’s David Rogers explained why Asian markets copped it yesterday with this: “Asia’s travails came after benchmark JKM spot LNG prices soared 45 per cent on Tuesday after QatarEnergy ceased production due to attacks on its operations in Ras Laffan, the world’s largest single LNG production and export complex, and Mesaieed.”
This shows how vulnerable our stock prices and super is to this war turning uglier than it already is.
Meanwhile, there are concerns that Trump’s offer to protect foreign insured ships might not be permitted under the US Development Finance Corporation rules that would cover US-owned and insured ships.
Of course, no one would imagine that Donald J. Trump would let old world rules get in the way of his goal to KO Iran as a threat to the US and the global economy.
This is also sending a powerful message to China’s Xi Jinping about his resolve to use the US military if he thinks US interests are being threatened.
It’s a new world for all of us and the stock market that has a big impact on our wealth via our super funds.
If only for money reasons, let alone the more worrying loss of lives, let’s hope this Iran war doesn’t last too long.
