Index Update: The S&P/ASX 200 closed sharply lower on Wednesday, tumbling 176.10 points or 1.94% to 8,901.20 and slipping below its 20-day moving average. The benchmark has declined 2.49% over the past five sessions and now sits 3.28% below its 52-week high. All 11 sectors finished in negative territory. Telecommunications Services was the session’s most resilient performer, edging down just 0.11% and remaining up 1.72% over the past five days.

The Australian sharemarket shed more than $60 billion in market capitalisation as escalating fears of a widening Middle East conflict rattled global equities. A sharp surge in oil prices further dampened sentiment, fuelling fresh concerns about inflationary pressures and the potential impact on interest rate expectations.

Macro Update: Australia’s economy expanded 0.8 per cent in the December quarter 2025, taking annual growth to 2.6 per cent, according to the Australian Bureau of Statistics. Growth was broad-based, with public and private demand each contributing 0.3 percentage points. GDP per capita rose for a fourth straight quarter, up 0.9 per cent year-on-year. Household spending increased 0.3 per cent, led by a 0.4 per cent lift in discretionary outlays amid expanded Black Friday sales and strong event attendance. The household saving ratio climbed to 6.9 per cent.

Meanwhile, the US-Israeli conflict with Iran intensified, with casualties reported in Lebanon and Israel, and Washington confirming four American deaths.

Top Market Movers: On Wednesday, the top gainers were led by BlueScope Steel (ASX:BSL), which rose AUD 0.890 or 3.308% to close at AUD 27.790. Digico Infrastructure REIT (ASX:DGT) added AUD 0.045 or 2.325% to AUD 1.980, while News Corporation (ASX:NWS) climbed AUD 0.830 or 2.248% to AUD 37.740. On the downside, Silex Systems (ASX:SLX) plunged AUD 0.680 or 10.119% to AUD 6.040. Paladin Energy (ASX:PDN) fell AUD 1.030 or 7.568% to AUD 12.580, and West African Resources (ASX:WAF) declined AUD 0.260 or 7.387% to AUD 3.260.

Commodity Update: The U.S. dollar climbed to a three-month high in Asian trading on Wednesday as investors moved toward safe-haven assets amid escalating Middle East tensions. The euro weakened while commodities gained on fears of supply disruptions. Gold rose 1.04% to USD 5,177.30, silver jumped 1.60% to USD 84.77, and copper advanced 0.99% to USD 13,072.80. Meanwhile, Brent crude gained 1.00% to USD 82.53 as the U.S.–Israeli conflict with Iran threatened regional energy exports.

Our Stance: The S&P/ASX 200 slumped 1.94% to 8,901.20, breaking below its 20-day moving average as more than $60 billion was wiped from market value amid escalating Middle East tensions. The sell-off came despite solid macro data from the Australian Bureau of Statistics showing GDP growth of 0.8% in the December quarter and 2.6% annually. Strength in BlueScope Steel (ASX:BSL) contrasted with sharp losses in uranium names. Near-term volatility is likely to persist given geopolitical risks and rising oil prices, but resilient domestic growth and a healthy savings rate suggest medium-term fundamentals remain supportive for selective, quality exposures.

The S&P/ASX 200 declined by 176.10 points in the latest session, forming a bearish candlestick on elevated trading volumes a sign of increasing investor caution and sustained near-term weakness. The heavier volume suggests that sellers were more aggressive, reinforcing the short-term negative tone. Despite the pullback, the index continues to trade above its 50-period Simple Moving Average (SMA) on the daily chart, which remains an important near-term support level. Immediate support is located around 8,800, and holding this zone will be crucial to stabilising sentiment and limiting further downside. On the weekly timeframe, the index also remains above its 50-period SMA, indicating that the broader long-term trend stays constructive, with potential for renewed upside once selling pressure eases.