The Australian share market fell sharply on Tuesday as volatile commodity prices persisted after Wall Street's Dow Jones index had its worst day in almost a year overnight.
After trading fairly flat for much of the session, local indices started to fall in mid-afternoon trade before closing 0.8 per cent lower at 6,980. The broader All Ordinaries lost 0.9 per cent to 7,252.
The Australian dollar was down 0.1 per cent and worth 73.03 US cents.
Oil prices rose on Monday, recording their largest ever daily moves on fears the US would ban imports of Russian oil.
This morning Bloomberg was reporting that the European Union aims to cut its dependence on Russian oil by 80 per cent in 2022. However, German chancellor Olaf Scholz overnight rejected a proposed European embargo on Russian energy.
NAB's head of FX strategy and markets Ray Attrill said Germany was currently dependent on Russia for imports of more than 55 per cent of its gas, half of its coal and 35 per cent of its oil.
After hitting $US139.13, the global benchmark Brent crude oil continued to go up and down. By 4pm AEDT, it was up 2 per cent on the previous close at $US125.68 a barrel.
US crude oil was 1.5 per cent higher at $US121.22.
Bank of America's chief economist Ethan Harris said the threat of a supply crunch if the West bans Russian oil is driving the volatility.
The lift in oil prices boosted energy stocks on Wall Street. Baker Hughes added 4.7 per cent, Chevron gained 2.1 per cent and Exxon Mobil rose 3.6 per cent.
But, overall, equities tumbled in New York.
The Dow Jones Industrial Average had its worst day in almost a year, down 2.4 per cent to close at 32,817.
The S&P 500 suffered its biggest loss since June, down 3 per cent to 4,201, while the Nasdaq Composite had its biggest decline since May, down 3.6 per cent to 12,830.
Bank stocks also fell on fears of rising inflation and the US economy slowing down.
American Express lost 8 per cent, Citigroup fell 1.8 per cent and US Bancorp dropped 3.9 per cent.
The pan-European STOXX 600 index lost 1.1 per cent, Germany’s DAX dropped 2 per cent and Britain's FTSE slid 0.4 per cent.
Nickel prices also soared, up by as much as 90 per cent on Friday's close.
"Russia produces 7 per cent of the world’s supply of this key stainless steel and lithium-ion battery ingredient," noted NAB's head of FX strategy and markets Ray Attrill.
Mr Attrill said the price moves were occurring with "sellers rushing to the sidelines, leading to sharp price jumps between trades as short position holders scrambled to buy back positions."
Iron ore spot prices also rose $US10.35, or 6.8 per cent, to $US162.75 per tonne.
Those commodity price jumps and the dominance of energy and mining companies on the local market is so far shielding the ASX from the scale of losses experienced on other major bourses.
However, energy and mining sectors lost ground throughout the session to close 3.4 per cent and 3 per cent lower, respectively.
Rio Tinto lost 4.6 per cent, BHP fell 3.3 per cent and Fortescue Metals Group was down 4.2 per cent.
Woodside lost 4.1 per cent, Santos fell 3.5 per cent and Origin dropped 3.1 per cent. Meanwhile, AGL Energy shed only 0.1 per cent, a day after announcing it had rejected a second takeover bid from Mike Cannon-Brookes and Brookfield.
Gold miner St Barbara Limited was the best performing stock on the top 200 companies index, up 11.4 per cent. Mesoblast Limited gained 4.5 per cent, Imugene Limited rose 4.4 per cent, Woolworths was up 3.6 per cent and CSL Limited added 2.7 per cent.
Leading the losses was Nickel Mines, down 9.3 per cent. Bluescope Steel tumbled 8.7 per cent, Liontown Resources fell 7.5 per cent, South32 Limited dropped 6.4 per cent and Oz Minerals fell 5.9 per cent.
Asia Pacific OANDA senior market analyst Jeffrey Halley said a sense of calm had returned to Asia's markets "thanks to the news headline tickers staying quiet about anything Ukraine, energy or otherwise commodity-related."
"One senses we are in the eye of the hurricane, a period of calm before the winds return once again," said Asia Pacific OANDA senior market analyst Jeffrey Halley.
Mr Halley said Australia was in a better position than other global markets to withstand the turbulence.
"The Lucky Country, of course, is better placed than most in the current climate, being a major exporter of just about every commodity that the world desperately wants," he said.
Business confidence up
Business confidence and conditions improved in February as the threat of Omicron eased, according to NAB's monthly business survey.
Business conditions rose 7 points in February, to +9 index points, which is be back above the long-run average.
Business confidence rose 8 points in February to +13 index points, building on a strong rise in January after a sharp fall in December.
Western Australia and Tasmania were the only states where confidence fell.
"The rebound came on the back of a strong rise in the employment index – reflecting fewer health-related employment disruptions and strong labour demand – as well as improvements in trading and profitability," noted NAB senior economist Brody Viney.
ABC/Reuters
