The Australian financial sector faced a wave of volatility this week as geopolitical tensions in the Middle East and a sudden spike in energy prices rattled investor confidence. While the market attempted a recovery earlier in the week, fresh reports of supply chain disruptions have sent the S&P/ASX 200 Financials index lower, with markets now bracing for a potentially hawkish turn from the Reserve Bank of Australia (RBA) next week.
Market Overview: Oil Shock Saps Risk Appetite
The ASX 200 fell 1.3% on Thursday, closing at 8,629 points, effectively wiping out most of the gains made during a brief two-day rally. The primary catalyst was a sharp rise in crude oil prices following news of further tanker attacks in the Strait of Hormuz.
For the financial sector, this energy volatility has translated into renewed inflation fears. The broader All Ordinaries lost approximately $42.6 billion in market value in a single session, with financials dragging the index down as investors weighed the impact of higher fuel costs on consumer spending and bad debt provisions.
Big Four Banks Under Pressure
Australia’s major lenders bore the brunt of the sell-off on Thursday:
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Commonwealth Bank (ASX: CBA): Fell 0.7%, as the bank’s own economists warned that Brent oil could surge to record levels between $120 and $150 per barrel if conflicts persist.
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ANZ (ASX: ANZ): Saw a steeper decline of nearly 2.0%, despite earlier resilience in the week.
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Macquarie Group (ASX: MQG): The investment giant’s shares dropped as much as 2.3% as global market uncertainty dampened appetite for deal-making and asset management.
RBA Watch: Rate Hike Tipped for March
The most significant shift this week has been in interest rate expectations. Prior to the oil spike, markets had priced in a relatively stable outlook. However, following the surge in energy-led inflation risks, the probability of an RBA rate hike at the March 16–17 meeting has skyrocketed to 78%, up from less than 30% just days ago.
CommBank economists now expect the RBA to lift the cash rate to 4.35% via two 25-basis-point hikes in March and May to head off secondary inflation effects.
Corporate Spotlight: ASX Ltd and Regulatory Oversight
ASX Limited (ASX: ASX) remains under the microscope following ASIC Chair Joe Longo’s opening statement to the Parliamentary Joint Committee on March 6. ASIC has imposed an additional $150 million capital charge on the exchange operator until its “Accelerate” transformation program meets key milestones. Despite this, ASX CEO Helen Lofthouse recently noted a solid 1H26 financial performance, with operating revenue up 11.2% to $602.8 million.
Wealth Management and Insurance
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GQG Partners (ASX: GQG): UBS has maintained a “Buy” rating on the asset manager, citing record funds under management (FUM) in February despite elevated net outflows. Analysts view the firm as an “attractive market hedge” due to its defensive portfolio tilts.
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Insurers: IAG and Suncorp saw a volatile week, initially rebounding from conflict-related sell-offs before softening again on Thursday in line with the broader financial sector.
Looking Ahead
All eyes are now on the RBA Board Meeting on March 17. Investors will be looking for confirmation on whether the central bank will prioritize inflation control over growth stability in light of the “energy shock.” Additionally, the Financial Stability Review scheduled for March 19 will provide deeper insight into how the Australian banking system is weathering the current geopolitical storm.
