Australia's share market is on track for its worst session since May after escalating hostilities between the United States and Iran sent oil prices and bond yields sharply higher, sapping investor confidence.
The S&P/ASX200 tumbled 105.3 points by midday on Wednesday, down 1.15 per cent, to 8,962.8, as the broader All Ordinaries fell 114 points, or 1.23 per cent, to 9,146.9.
"Risk sentiment was hit by the continued re-escalation in tensions between the US and Iran as strikes continue to be exchanged," WEstpac economist Ryan Wells said.
"The threat of further disruptions to the Strait of Hormuz has brought about renewed anxiety over inflation, driving a sell off in stocks across most major markets and a rout in global bond markets."
Renewed fighting sent Brent crude above $96 a barrel for the first time in almost six weeks, while bond yields spiked to multi-year highs amid concerns around persistent global inflation and spiralling government debt levels.
Australian 10-year yields hit 5.2 per cent for the first time since 2011, while US 30-year treasury yields reached their highest levels in nearly two decades.
The resources sector was hit hardest, slumping 3.4 per cent as BHP and Rio Tinto shares buckled under the weight of fuel supply concerns and easing copper prices.
Capstone Copper was one of the top-200's worst performers, tumbling 7.7 per cent to $15.15 per share.
Precious metals were also under pressure, with gold stocks a sea of red as the yellow metal fell to $US4,307 ($A6,024) an ounce, dragging the local sub-index 4.5 per cent lower.
Energy stocks gained 0.5 per cent, despite a solid lead from Woodside and Santos being as largely offset by dips in refinery operators, coal producers and uranium stocks.
Communications stocks outperformed the other sectors with a 0.5 per cent lift as Telstra rebounded to $4.72 after an external investigation found the company's July outage had been caused by a timing issue and lack of oversight.
Telstra shares are still down almost seven per cent following the incident, which impacted millions of Australians.
Financials stocks were trading slightly above break-even, as strong performances from major insurers helped ballast flat-to-weak moves from the big four banks.
CommBank shares were down for the session to $158.29, but bounced slightly after the Australian economy grew 0.4 per cent in the June quarter, outshining consensus forecasts of 0.3 per cent.
The figure leaves the door open to a Reserve Bank interest rate hike later in September, with markets putting the likelihood at a coin toss, and full-pricing the official cash rate to be 4.6 per cent by November.
The Australian dollar is buying 71.49 US cents, down from 71.64 US cents on Tuesday at 5pm, also improving marginally after the GDP data release.
