ASX Rises on Energy Rally Despite Middle East Tensions; Moonshot AI Launch Challenges US Valuations

The ASX 200 lifted amid an energy sector rally driven by rising oil prices due to Middle East tensions, defying Wall Street's retreat. The index rose 0.3% to 8,823 points, while the Australian dollar remained flat at 69.83 US cents. Wall Street had closed lower on Friday, with the S&P 500 down 1.0% and the Nasdaq down 1.5%. In Europe, the Dax fell 0.3% and the Eurostoxx dropped 0.8%, though the FTSE gained 0.3%.

Spot gold dipped 0.5% to $3,999 per ounce, while oil prices surged. Brent futures jumped 2.7% to $90.51 per barrel, and WTI futures rose 2.4% to $84.43 per barrel. Iron ore remained flat at $100.10 per tonne, and copper fell 0.3% to $13,543 per tonne. Bitcoin gained 0.8% to $65,014.

The ASX defied global headwinds, with energy and utilities leading the gains. Oil and gas producers benefited from the price spike, with Woodside up 1.8%. Fuel refiners and retailers also rose, with Ampol up 3.6%. Coal miners were in demand, with New Hope up nearly 2%. Uranium stocks also gained, with Deep Yellow up 5.5%. Banks performed well, with CBA up 0.8%, though Macquarie slipped marginally. Miners were generally softer, except for South32, which rose 1.2% on a strong production update. Conversely, airlines and travel stocks fell on prospects of higher costs, with Virgin Australia down 2.7%. The top mover was 4DMedical, up 8.1%, while the bottom mover was Endeavour Group, down 4.2% on a broker downgrade.

In the housing market, auction clearance rates slipped to 50%, down from almost 55% the prior week. Cotality's Tim Lawless noted that rates below 60% are associated with price falls. Attendance at open homes has dropped more than 40% over the past year, according to Ray White, with average attendance falling from 3.6 to 2.1 people per home. The decline is attributed to higher borrowing costs and weak confidence.

South32 delivered a strong fourth-quarter production update, increasing quarterly sales by 15%. Aluminium production beat guidance by 1%, and the Cannington silver and lead mine saw a 30% production increase. Gold miner St Barbara also beat guidance, lifting production by 8% in the fourth quarter to 7,329 ounces.

ASIC released its FY2026 results, reporting a record $830 million in civil penalties. The corporate regulator secured $644 million in repayments to Australians. Major targets included Union Standard ($300 million penalty), HSBC ($35 million), Macquarie Securities ($35 million), Westpac ($26 million), Walker Stores ($33.5 million), and Mercer Super ($10.3 million). ASIC Chair Sarah Court highlighted 25 criminal convictions, including 11 custodial sentences.

In technology news, Chinese startup Moonshot AI unveiled Kimi K3, a 2.8 trillion-parameter open-weight model. The company claims it is the world's largest open AI model and delivers performance approaching US giant Anthropic's frontier Fable model. Kimi K3 features a 1 million-token context window and is designed for advanced reasoning and long-horizon coding. The development, backed by Alibaba and Tencent, challenges assumptions about US AI dominance. NAB's Ray Attrill noted that the launch intensifies concerns about valuations in the US AI sector, drawing parallels to DeepSeek's earlier disruption. Moonshot claims its model outperforms rivals except Anthropic's Claude Fable 5 and OpenAI's GPT-5.6 on overall capability, though it trails them on some benchmarks while exceeding them on others like GPU kernel optimization and specific coding tasks.

Meanwhile, Anthropic has advertised for a "Data Centre Energy Lead, Australia," signaling potential plans to scale compute capacity in the country. The role involves navigating Australia's energy regulatory environment to support frontier AI development. Previously, Anthropic representatives indicated a desire for 5 gigawatts of power by 2030.