May 10, 2026, Sydney—clock just past 3:02 AEST.
Australian shares managed to squeeze out a weekly gain—the first in four weeks—though it was barely there. The S&P/ASX 200 dropped 133.7 points, or 1.51%, on Friday to close at 8,744.4, but thanks to two firmer sessions earlier, the index still ended the week up roughly 0.2%.
A modest uptick, but it’s meaningful in a market grappling with dual headwinds—domestic borrowing costs on the rise and new unease swirling around the Strait of Hormuz, a vital artery for world oil and gas flows. The Reserve Bank of Australia noted that the Middle East conflict sent fuel and related commodity prices surging, compounding existing inflationary strain.
The RBA hiked its cash rate by 25 basis points to 4.35% on Tuesday, with the board voting 8-1 in favor. Citing ongoing upside risks to inflation, the central bank left little chance of relief for rate-sensitive stocks.
Governor Michele Bullock didn’t mince words about this week’s mess in markets. The oil shock, she said after the meeting, had “worsened the trade-off between inflation and growth.” With rates raised, the board now has some breathing room to watch how the conflict plays out and what households do next. Reserve Bank of Australia
The selling hit almost everything on Friday. Ten out of eleven local sectors finished lower, financials taking the brunt—Westpac tumbled 4.8%. The banking group logged its fourth consecutive weekly slide. “Local shares were still underperforming global counterparts,” said Capital.com senior market analyst Kyle Rodda, despite an otherwise improved week. Morningstar
Resources didn’t provide much cover. BHP, Rio Tinto, and Fortescue all slipped on Friday, even with iron ore futures hanging onto their gains. Energy and utilities shares moved lower as well, oil prices notwithstanding. The week brought a strange combination—commodities fueled inflation jitters, but that didn’t turn into broad buying for local cyclicals.
Macquarie turned in one of the cleaner corporate beats out there. The investment bank posted a 30% jump in full-year net profit, reaching A$4.85 billion—well ahead of the Visible Alpha consensus at A$4.39 billion—driven by strong numbers from its commodities and global markets business. Shares surged to a record A$249.49, but that didn’t last; they slipped as the broader market lost ground.
Macquarie chair Glenn Stevens—who once led the RBA—called the war “a very difficult shock for policymakers,” pointing out that tighter supply and climbing prices don’t bend easily to interest rate moves. Simon Wright, running Macquarie’s commodities and global markets unit, flagged that trading desks might benefit from market swings, but said “prolonged volatility” puts clients off. Reuters
Oil risk still lingers. Citi, in a note Friday, stuck with a forecast that disruption through the Strait of Hormuz would start winding down by the end of May. Even so, the bank held its zero-to-three-month Brent target at $120 a barrel, warning that oil markets are “under-pricing duration and tail risks.” Reuters
The downside risk hasn’t gone away. Energy supply disruptions could continue to push up freight, food, and service prices, locking the RBA into a tighter stance even as earnings and household spending come under pressure. AMP chief economist Shane Oliver warned that the longer the strait stays shut, “the greater the hit” for both the global and Australian economies. ABC News
The federal budget lands Tuesday, setting up a fresh hurdle. Westpac chief economist Luci Ellis calls it “possibly the most interesting federal budget in at least a decade.” Higher commodity revenues have opened up some space for the government, but inflation is still leaning on any push for new spending. ABC News
Wall Street put up a stronger finish Friday—S&P 500 and Nasdaq both hit record highs after a robust U.S. jobs print and tech leading the way. Australia didn’t get quite the same lift. The ASX 200 snapped its losing run, but between banks, interest rates, and a murky oil picture, the rebound came off as light.
