Australia's share market has handed back its modest gains after oil prices surged amid escalating conflict between the US and Iran, hitting risk sentiment.
The S&P/ASX200 fell 5.4 points on Monday, down 0.06 per cent to 8,791.3, as the broader All Ordinaries lost 4.1 points, or 0.05 per cent, to 8,974.7.
Energy stocks were a lonely success story, the sector up 1.8 per cent as crude prices soared to six-week highs, and the traditionally defensive consumer staples and communications segments edged roughly 0.5 per cent higher.
"At the index level, it looks quiet, but that's far from the case - under the surface, we're seeing some pretty significant moves," Moomoo market strategist Michael McCarthy told AAP.
"We're seeing pressure on capital markets groups and on some software stocks, mining stocks and real estate, so generally, we're looking at a pretty negative day, but support for the banks and energy stocks is offsetting a lot of that negativity."
Refinery operator Viva Energy was a stand-out, up almost four per cent to $2.43 as Brent crude edged higher to almost $US91 a barrel, its highest price since June.
Woodside, Santos, coal miners and uranium stocks also charged higher.
Basic materials eased by 0.3 per cent as BHP traded flat but Rio Tinto and Fortescue dipped into the red.
Gold miners were generally weaker as the precious metal hovered about $US4,005 ($A5,732) an ounce and the sub-index faded 0.3 per cent.
South32 shares rocketed 4.6 per cent higher after a positive June-quarter update, while battery minerals and rare earths producers were broadly lower.
The heavyweight financials sector gave up an early advance to close the session slightly lower.
CommBank and NAB lost ground but Westpac and ANZ eked out minor gains.
IT stocks underperformed the market, dropping 1.6 per cent in a broad-based sell-off.
In company news, Dan Murphy's and BWS owner Endeavour lost two per cent after a downgrade from Morgan Stanley, against a backdrop of tighter margins and softer alcohol demand.
Meanwhile, the Australian Securities and Investments Commission secured a record $830 million in civil penalty orders in the 2025/26 financial year.
The Australian dollar is buying 69.90 US cents, up slightly from 69.86 US cents on Friday at 5pm.
While the renewed conflict in the Persian Gulf appears to have shaken investor confidence, some traders were looking beyond the latest escalation with optimism.
"While oil has gradually moved higher in recent days, the forward curve suggests markets still expect the latest spike to prove temporary rather than the start of a sustained supply shock," Global X senior investment strategist Marc Jocum said.
"With US mid-term elections approaching, investors also recognise President Trump has a strong incentive to prevent a prolonged energy crisis."
ON THE ASX:
* The S&P/ASX200 fell 5.4 points on Monday, or 0.06 per cent, to 8,791.3
* The broader All Ordinaries slipped by 4.1 points, or 0.05 per cent, to 8,974.7
One Australian dollar trades for:
* 69.90 US cents, from 69.86 US cents at 5pm AEST on Friday
* 113.53 Japanese yen, from 113.35 Japanese yen
* 61.12 euro cents, from 61.01 euro cents
* 51.93 British pence, from 51.84 pence
* 119.49 NZ cents, from 119.61 NZ cents
