The local share market is set to tumble this morning after oil prices surged beyond $US92 a barrel over the weekend, and US President Donald Trump, on social media, said Iran would be hit very hard and the war could expand to other areas and groups of people. After falling nearly four per cent last week, the S&P/ASX200 is set to open nearly two per cent lower, according to futures trading. Oil prices have risen on the back of feared production disruption throughout the Middle East, and the closure of the Strait of Hormuz, which shifts about 20pc of the world’s oil supply. Over the weekend, Iranian state media reported that an oil storage facility in southern Tehran had been hit in a US-Israeli strike. The Islamic Revolutionary Guard Corps indicated it would retaliate by striking a refinery in Israel. Meanwhile the UAE and Kuwait started cutting oil output, because they can’t ship it anywhere.

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News in brief

Fuel rationing in Australia has been introduced by one wholesaler in the wake of the Middle east conflict. United Petroleum has told customers it has suspended normal fuel allocations “across all locations effective immediately”, citing uncertainty in global oil markets and potential disruption to shipping routes and freight availability.

Long weekends in Victoria, South Australia and the ACT cut the number of homes up for auction over the past week, although the combined preliminary clearance rate was a relatively strong 72.1 per cent.

Australia Post has “posted” $5 billion in revenue for the December half, with parcels and services now comprising 80 per cent of turnover. But group profit fell from nearly $250m, to $50m as it invested in its delivery businesses.

The ASX will simplify rules for listed companies, hoping to have the changes in place by the end of the year. Former RBA Governor Phil Lowe is chair of a new corporate governance body within the ASX.

The rise and rise of data centres, which are often located in out-of-the way regions, has fostered what are becoming known as “man camps” across the USA. As building companies fight for staff, they have shifted from offering dodgy WiFi at a local motel, to temporary villages offering games rooms, free steak and golf simulators.

Fear-o-meter

David Bassanese, chief economist, Betashares

The United States economy is now confronting the dilemma of both weakening economic activity and stubbornly persistent inflation - a combination otherwise known as “stagflation”, which is the worst of all worlds for bond and equity markets.

Although the surprise drop in US employment in February can be partly attributed to one-off factors, it’s also consistent with a broader easing in employment demand and supply over the past year.

Higher US tariffs along with the crackdown on illegal immigration have both conspired to weaken labour demand and labour supply. Higher US tariffs have both added to economic uncertainty and consumer prices while reducing corporate profits. The crackdown on illegal immigration - estimated to account for 10% of the workforce - has also reduced labour supply.

Raising tariffs while restricting the supply of labour are just the first two of the negative supply shocks US President Donald Trump has imposed on the world’s leading economy.

We can now add a third stagflationary negative supply shock - the war with Iran, which has already raised global oil prices by 30%. Whatever the justification for this war, the hit to US energy costs will also act to dampen economic activity whilst boosting inflation.

The RBA faces its own dilemma. New downside risks to the US economy must also be something the RBA will need to consider when next deciding on rates later this month. Yet at the same time, a prolonged rise in petrol prices will add to the risk of inflation staying uncomfortably higher for longer - potentially feeding into wage and price inflation expectations at a time when both product and labour markets are tight and both workers and businesses have strong pricing power.

Fear & Greed Q+A today

On whether we're too negative about the Australian economy:

 

"That's a real bugbear of mine. And look, it's not just all sweetness and light — you know me, I've been very critical of the economy and economic policy over many, many years.

 

But when we see some good news on the economy — the national accounts confirming GDP growth in 2025, December quarter on December quarter of the year before, at 2.6 per cent — that's the strongest in three years. And if we take out the pandemic volatility, it's one of the strongest results in about eight years.

 

So the economy's recovered. It's growing nicely. You overlay that with the labour market numbers we saw a week or two back — unemployment at 4.1 per cent — which is very rare. Over the last 50 years there have really only been two years where unemployment has been lower.

 

So I look at those things and think that's great news. That's what the Reserve Bank wants to see. Some people say the RBA would be disappointed with the GDP numbers — I reckon they'll be having an extra Ice VoVo and a stronger Earl Grey tea celebrating the fact the economy is growing.”

Greed-o-meter

The US is leading the way on data centre construction, but the real surprise in this November 2025 data is just how many data centres Australia has compared to other developed countries. We even come in ahead of India and Japan.

Source: Statista

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