1 week ago
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Stan Choe
Updated May 5, 2026 — 8:10am,first published 5:22am
The US stock market fell from its record heights, while oil prices jumped following escalations in the Middle East that may undermine the ceasefire in the war with Iran.
The S&P 500 sank 0.4 per cent, coming off its latest all-time high. The Dow Jones dropped 557 points, or 1.1 per cent, and the Nasdaq composite slipped 0.2 per cent.
The action was stronger in the oil market, where the price for a barrel of Brent crude leaped 5.8 per cent to settle at $US114.44. It jolted higher after the United Arab Emirates, a US ally, said it came under attack by Iran for the first time since the ceasefire took hold in early April. The attacks appeared to be in response to US President Donald Trump’s latest efforts to reopen the Strait of Hormuz.
The Australian sharemarket is set to decline, with futures at 6.53am AEST pointing to a fall of 70 points, or 0.8 per cent, at the open. The ASX lost 0.4 per cent on Monday. The Reserve Bank announces its interest rates decision on Tuesday afternoon, with higher inflation expected to force the central bank to inflict a third consecutive hike. Financial markets put the chance of a rate rise at 75 per cent with at least one more increase expected by October.
Westpac has delivered $3.4 billion in first-half profits, an increase of 3 per cent compared with the same half last year, as it reported a decline in its stressed loans.
The country’s second-largest retail bank on Tuesday reported its deposits and loans grew more than 7 per cent over the year, with its total loans rising to $890.3 billion as customer deposits hit $745.2 billion.
Chief executive Anthony Miller said the banking giant was positioned to deal with the economic challenges of the war in the Middle East, noting it had increased its provisions for bad debts.
“The war in the Middle East is presenting challenges for some customers and the economic impact of the conflict will continue through the year. The disruption to energy supply chains has driven a rise in prices and we’re seeing this flow through to businesses and households, with some sectors more affected than others,” Miller said.
Overnight, the US military said that two American-flagged merchant ships had successfully transited the Strait of Hormuz. It also said that it sank six small boats as it set up an “enhanced security area” for ships crossing the strait.
US President Donald Trump said on Sunday (US time) that the United States would guide ships through the strait, which could get oil flowing again and bring down its price. But prices instead climbed with uncertainty about what would happen next.
Even with all the uncertainty about how long the war with Iran will last, the US stock market has remained remarkably resilient and has powered to record after record. Hope is still high on Wall Street that the global economy can avoid a worst-case scenario because of the war. And in the meantime, companies continue to deliver big growth in profits. That’s key because stock prices tend to follow the path of corporate profits over the long term.
The strength so far this reporting season has been broad-based and not confined to just the Big Tech superstars that dominate the market. The median stock in the S&P 500 is tracking for the best growth since 2021, according to Savita Subramanian, a strategist at Bank of America.
UPS and FedEx dropped even more for some of the market’s sharpest losses after Amazon announced a move that could cut into their businesses. The online giant said it’s begun allowing Procter & Gamble, 3M and other big companies to use its logistics services to move inventory, fulfill orders and deliver packages directly to shoppers.
UPS dropped 10.5 per cent, and FedEx fell 9.1 per cent, while Amazon rose 1.4 per cent.
GameStop slumped after it said it wants to buy eBay, a much larger company, in a $US56 billion ($78 billion) cash and stock deal. Coming into the day, eBay had a total market value that was nearly quadruple GameStop’s.
GameStop said it has already built a 5 per cent stake in eBay and sees opportunities to cut $USUS2 billion in annual costs quickly. GameStop, whose stock briefly soared to market-shaking heights during the meme stock craze of 2021, fell 10.1 per cent, while eBay rose 5.1 per cent.
All told, the S&P 500 fell 29.37 points to 7,200.75. The Dow Jones Industrial Average dropped 557.37 to 48,941.90, and the Nasdaq composite slipped 46.64 to 25,067.80.
In stock markets abroad, gains for tech stocks helped indexes jump 5.1 per cent in South Korea and 1.2 per cent in Hong Kong, while markets were closed in mainland China and Japan for holidays.
European indexes fared worse, and France’s CAC 40 fell 1.7 per cent.
In the bond market, Treasury yield jumped with the price of oil. The yield on the 10-year Treasury rose to 4.43 per cent from 4.39 per cent late on Friday. It was at just 3.97 per cent before the war began, and the rise has made mortgages and other kinds of loans for US households and businesses more expensive.
AP
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