Investors expect the escalating Middle East conflict to cast a pall over what will already be a highly volatile ASX reporting season, which kicks off this week, with the threat of inflation contributing to an aggressive rate-hiking cycle and hurting consumer sentiment.
Futures indicate the S&P/ASX 200 will fall 1 per cent at the opening bell on Monday, although these came before US President Donald Trump backed down on his plans to attack Iran. The benchmark index eked out a 0.1 per cent on Friday to finish with a 2.3 per cent gain for July.
Oil in July posted its biggest monthly gain since March, after the war between the US and Iran broke out, as a fragile pause in hostilities between Washington and Tehran collapsed and Houthis entered the five-month-long conflict, adding a layer of risk to shipments in the Red Sea.
Saudi Arabian forces joined the US to strike Iran-backed groups in Iraq, while Egypt, a close US ally and regional mediator that had been one of the few countries in the Middle East to have been spared direct military action, was also dragged into the fray as drone strikes ignited fires on two natural gas ships at the Egyptian port of Damietta.
Ukraine also veered dangerously close to entering the war last week after it struck an Iranian commercial cargo ship in the Caspian Sea, killing an Iranian civilian sailor. Ukraine said the ship was transporting military equipment to Russia, and while Iran considered relations and a full-blown crisis could have threatened to bring together the US-Iran war with the Ukraine-Russia conflict, diplomats defused the matter.
Source: https://www.afr.com/markets/equity-markets/asx-to-fall-as-middle-east-conflict-set-to-dominate-reporting-season-20260802-p60kmr