Australian shares fall on losses in tech, discretionary stocks; US-Iran clashes resume

Tuesday saw Australian shares tumble, fueled by a slump in discretionary and technology stocks, as market sentiment soured due to renewed US-Iran military skirmishes and mounting concerns over surging inflation. The S&P/ASX 200 index closed 0.4% lower at 9,040.30, following a 0.2% decrease on Monday. Oil prices surged following Iran's retaliatory strikes on two US air bases in Jordan, following an attack on Iran’s Larak Island, raising fresh worries about potential global supply interruptions.

Energy stocks soared, with Santos and Woodside Energy rising 1% each. In Australia, housing data revealed a 5th consecutive monthly decline in home prices in August, as the housing slump expanded to additional cities and regions, with the probability of further tightening policies suggesting more challenging conditions ahead. Swaps suggest a greater than 50% likelihood of a quarter-point rate increase in September.

Focus now turns to second-quarter GDP figures, scheduled for release on Wednesday. Rate-sensitive financials and real estate stocks slipped 0.4% and 0.6%, respectively. The "Big Four" banks experienced mixed results. Discretionary stocks plummeted up to 2.8%, touching a nearly three-month trough. Technology stocks declined up to 2%, hitting a near one-month low, mirroring the downturn in their US peers.

The mining sub-index edged up by 0.1%, with BHP Group and Rio Tinto each gaining 0.8% and 0.7%, respectively. Gold stocks also climbed 0.4%, with Northern Star Resources advancing 0.8%. Over in New Zealand, the S&P/NZX 50 index slipped 0.9% to 13,789.38. A Reuters poll indicated there is a strong expectation that New Zealand's Reserve Bank would lift interest rates by 25 basis points to 2.75% during Wednesday's meeting.