Issue #9 | War Sends Markets Lower as Inflation Risks Rise

Global Markets - Markets Slide as Conflict Fuels Inflation Fears
ASX - ASX this week, Top 3 Winners & Losers
Deals Down Under - Koala and Pay.com.au test Australia’s IPO market
Other News - Aussie Politics, Sport, Culture and more

Missiles, oil prices and further geopolitical tensions dominated the headlines as the Middle East conflict entered Day 17 with the timeline for the war becoming increasingly uncertain. United States President, Donald Trump initially suggested a 4-5-week timeline and supported that on Monday night ensuring that they are “very close to finishing” their military operations. However, only the day before US Defense Secretary Pete Hegseth stated that “this is only just the beginning”. 

With uncertainty looming, global markets extended its losses for the third week in a row with the S&P 500 recording a 1.6% loss. Both the Dow and the Nasdaq fell 2% and 1.3% respectively for the week. As global markets continue to fall, Wall Street is bracing for a Stagflationary environment of higher inflation and slower economic growth. Despite positive earnings, investor sentiment continues to struggle as uncertainty around the war and supply issues persist. 

For Australia there are the same economic impacts with major issues surrounding oil supply shortages affecting major sectors such as export, supply chain distribution, aviation and other related industries. With higher freight and supply chain issues, consumers will eventually bear the cost.

With the cost of oil surging, Australians are already seeing the everyday impact with petrol prices jumping 50c on average since the start of the war. Australians looking to book flights are expected to see a 5% rise after jet fuel rose 150% over the past fortnight.

With no end in sight, the Middle East conflict is expected to keep pressure on the global economy, with higher energy prices, rising costs and slower growth likely to weigh on Australia and the world.

After a poor performance last week, the ASX 200 continued dropping a further 2.6% for the week, making it the lowest weekly close since December. Driven by uncertainty surrounding the Middle East conflict, the sharemarket has wiped out $190bn in market value since the beginning of the war (February 28th).

The week’s best performers on the ASX 200 include:

In contrast, the worst performers on the ASX 200:

Yancoal (ASX:YAL), one of Australia’s largest coal producers and exporters, had an impressive week in the markets. Off the back Iran’s closure of the Strait of Hormuz, global producers have looked to coal to deal with supply shortages of oil and gas. As a result, the price of coal has increased 25% for the year, lifting coal producers such as Yancoal.

Both Electro Optics Systems (ASX:EOS) landed a huge US$45m order for their counter-drone systems used to strengthen defence systems, with an undisclosed country in the Middle East purchasing one of their systems. Amidst rare earth supply pressures from China, Lynas Rare Earths (ASX:LYC) secured a long-term supply deal with Japan Australia Rare Earths (JARE), backed by Japan’s government and industrial groups. Earnings certainty enticed investors this week, leading to a 12.93% increase in its share price. 

While the coal and defence stocks had favourable weeks, other mining and materials-related stocks struggled. IperoniX (ASX:IPX), an American titanium metal and critical minerals company dropped a staggering 23.9% after heavy losses (US$34.77m) in their half-year results.

Northern Star Resources (ASX:NST) cut its expectations on their gold production for the year, with the gold miner estimating 1.5m ounces compared to its initial estimate of 1.85m ounces. Investors didn’t react well with Northern Star’s share price dropping 19.38%. Orica, a leading global manufacturer/supplier of explosives and blasting systems dropped due to a downturn in future short-term profits and potential future impacts from the Middle East.

Australia’s long-quiet IPO market may be stirring, with online furniture retailer Koala and payments platform Pay.com.au both announcing plans to list on the ASX this week. The deals arrive after a prolonged drought in Australian mega listings, with the most recent consumer IPOs being GemLife Communities (ASX:GLF) and Virgin Australia (ASX:VGN) both in 2025 and Guzman y Gomez’s (ASX:GYG) float in mid-2024.

Koala is targeting a $305 million market capitalisation and raising around $68 million, pricing shares at $3.40. Part of the proceeds will be used to reduce debt, while the remainder will provide liquidity for existing shareholders. The company attempted to list last year but withdrew amid market volatility following global geopolitical tensions. This time, the offer has been structured more conservatively, valuing Koala at roughly 10.5× forecast EBITDA, which bankers hope will appeal to investors in a cautious market.

Meanwhile, Pay.com.au is seeking to raise $85 million in capital, valuing the business at around $850 million pre-money. Unlike Koala, the payments platform’s IPO is focused entirely on funding growth, with no existing shareholders selling down. Significant escrow arrangements for founders and major shareholders are also intended to signal long-term commitment.

The timing is notable. Global markets remain volatile following escalating conflict in the Middle East, including higher oil prices and sharper moves across equity markets. Geopolitical shocks typically shut the IPO window, as investors become more risk-averse and new listings struggle to price accurately amid rapidly changing market conditions. In that environment, most companies delay floats until markets stabilise.

More broadly, IPO activity has slowed in recent years as companies increasingly turn to private capital, where funding from private equity, venture investors, and institutional backers can often be raised more quickly and with fewer disclosure requirements. Public listings also bring higher compliance costs, regulatory scrutiny, and the pressure of quarterly market expectations, making IPOs less attractive unless companies have a clear strategic reason to list.

Against that backdrop, the fact that Koala and Pay.com.au are pressing ahead is surprising. Rather than signalling a full reopening of the IPO market, these deals appear carefully structured to work in difficult conditions, smaller raises, disciplined valuations and clear use of proceeds. If they trade well, they may offer an early indication that even in volatile markets, investors are still willing to back well-priced, pragmatic floats.

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