Australian shares finished the week on a high note, with the S&P/ASX 200 climbing 0.64% on Friday to close at 8,716.60. The gain came even as investors looked past a weak session on Wall Street and the surprise withdrawal of a major local IPO.
The local market's resilience was notable given the overnight lead from the US, where the tech-heavy Nasdaq fell 1.3% and the S&P 500 slipped 0.5%. The selloff was driven by fresh doubts about OpenAI's ability to turn its rapid growth into steady revenue, a concern that has been echoing through the tech sector.
But Australian investors found reasons to be cheerful, with the energy sector providing a key tailwind. Oil prices fell more than 1% after US President Donald Trump said he would not order attacks on Iran before the midterm elections due in November, easing fears of near-term supply disruptions. Lower oil prices are generally good news for the broader economy, as they feed into cheaper fuel and transport costs.
Why oil prices matter to your portfolio
Oil is a global commodity, and its price movements ripple through almost every sector. When crude falls, it reduces input costs for airlines, trucking companies, and manufacturers, which can boost profit margins. It also eases pressure on household budgets, as petrol prices tend to follow crude lower.
For Australian investors, the energy sector is a significant part of the ASX 200, with heavyweights like BHP and Woodside having large oil and gas operations. When oil prices drop, those companies' earnings can take a hit, which is why the index's rise on Friday was notable—it suggests other sectors, such as banks and consumer stocks, helped offset any energy drag.
The cooling in oil prices also comes at a time when inflation is still a concern for central banks. Cheaper energy can help bring down headline inflation, which might reduce the pressure on the Reserve Bank of Australia to keep interest rates high. That's a potential positive for borrowers and for the housing market.
Investors shrug off a pulled IPO
Another overhang that failed to dampen the mood was the withdrawal of a major IPO. Nvidia-backed Firmus, a data centre operator, pulled its planned A$5 billion listing on the Australian Securities Exchange, opting instead to pursue private funding. The move is a reminder that the IPO market remains choppy, with investors demanding lower prices and more certainty before committing capital.
This is part of a broader trend we've seen recently, where IPO comebacks have stalled as investors hold out for better valuations. For everyday investors, a pulled IPO isn't necessarily bad news—it can signal that companies are being disciplined about pricing, which may lead to better opportunities when listings do go ahead.
The Firmus withdrawal also highlights the growing scrutiny of AI-related businesses. As AI's funding bill comes due, investors are increasingly demanding that companies show a clear path to profitability, not just growth. That's a theme that's likely to persist.
What it means for investors
For Australian investors, Friday's session offered a few lessons. First, the local market can diverge from US tech moves, especially when other factors like oil prices are supportive. Diversification across sectors and geographies remains a key tool for managing risk.
Second, the oil price drop is a reminder that commodity prices are volatile and can shift quickly. If you hold energy stocks, be prepared for swings. But for the broader market, lower oil is generally a tailwind.
Finally, the IPO withdrawal is a signal that the listings market is still finding its footing. If you're considering investing in new listings, patience and careful research are more important than ever.
As always, it's wise to keep an eye on global developments, particularly US tech earnings and oil supply news, as these are likely to influence the ASX in the coming weeks.
