Index Update: The Australian sharemarket fell sharply on Thursday as escalating attacks on Middle East energy infrastructure drove oil prices higher, intensifying inflation concerns and reinforcing expectations of a potential May rate hike. The S&P/ASX 200 dropped 142.80 points, or 1.65%, to close at 8,497.80. Over the past five sessions, the index has declined 1.52% and is now down 2.48% year-to-date. Losses were broad-based, with eight of the 11 sectors finishing in negative territory. In contrast, the energy sector outperformed, rising 5.08% on the day and gaining 6.02% over the past five days, supported by the surge in global oil prices.

Macro Update: Australia’s labour market softened in February, with the seasonally adjusted unemployment rate rising to 4.3%, according to the Australian Bureau of Statistics. The increase was driven by a rise of 35,000 unemployed people, alongside fewer jobseekers transitioning into employment compared to recent February trends.

Employment grew by 49,000, led by a strong increase in part-time roles (+79,000), while full-time employment declined by 30,000. Growth in part-time work was particularly evident among those aged 65 and over, with fewer individuals leaving the workforce for retirement.

Hours worked dipped 0.2% during the month, reflecting the shift toward part-time employment. Meanwhile, the participation rate rose 0.2 percentage points to 66.9%, as both employment and unemployment levels increased.

Top Market Movers: Top gainers on the ASX were Viva Energy Group Limited (ASX:VEA), rising AUD 0.320 or 15.165% to AUD 2.430, followed by Yancoal Australia Limited (ASX:YAL), up AUD 0.632 or 8.542% to AUD 8.030, and Woodside Energy Group Ltd (ASX:WDS), gaining AUD 2.260 or 7.188% to AUD 33.700. Among the top losers, Ora Banda Mining Ltd (ASX:OBM) fell AUD 0.210 or 14.094% to AUD 1.280, Westgold Resources Limited (ASX:WGX) declined AUD 0.790 or 12.804% to AUD 5.380, while IperionX Limited (ASX:IPX) dropped AUD 0.490 or 12.099% to AUD 3.560.

Commodity Update: The U.S. dollar held steady after the Federal Reserve kept rates unchanged, highlighting uncertainty from rising oil prices. Fed Chair Jerome Powell said higher energy costs will likely push inflation higher. Gold fell 0.70% to USD 4,862.50, silver dropped 1.34% to USD 76.54, and copper declined 1.12% to USD 12,275.00. Meanwhile, Brent crude surged 4.52% to USD 112.26 after Iran struck key energy facilities following the South Pars attack, escalating Middle East tensions and supply risks.

Our Stance: The S&P/ASX 200 retreated sharply as rising geopolitical tensions in the Middle East pushed oil prices higher, fuelling inflation fears and reinforcing expectations of tighter monetary policy. A softer labour market, with unemployment rising to 4.3%, adds complexity—signalling cooling conditions but not enough to ease rate concerns. Energy stocks outperformed amid the oil surge, while broader weakness reflects cautious sentiment. It seems markets may remain volatile in the near term, with inflation risks and rate outlook dominating, though elevated energy prices could continue supporting resource-linked sectors.

In its latest session, the S&P/ASX 200 declined by 142.80 points, forming a bearish candlestick on elevated trading volume. The rise in volume during the sell-off reflects increasing investor caution and signals short-term weakness in overall market sentiment. From a technical standpoint, the index continues to trade below its 21-period Simple Moving Average (SMA) on the daily chart, which is acting as a key resistance level and capping upside attempts. Unless the index reclaims this barrier, bullish momentum is likely to remain constrained. On the downside, immediate support is positioned near the 8,400 level, which will be crucial to hold in order to stabilise sentiment and limit the risk of a deeper correction.