Australia's share market is trading lower after being the first major bourse to open after the US and Israel bombed Iran during the weekend.
The S&P/ASX200 fell 38.4 points by midday, down 0.43 per cent, to 9,159.4, as the broader All Ordinaries lost 44.5 points, or 0.47 per cent, to 9,391.1.
"Despite weeks of escalating tensions as the US and Iran held talks on the Islamic republic's nuclear ambitions, markets had not priced a comprehensive strike," Capital.com market analyst Kyle Rodda said.
Iran's size and relative isolation from the world economy meant the conflict's global impact would likely be lesser than with Russia's invasion of Ukraine, he said.
"All in all, it’s a supply shock that could ripple across the global economy, especially if the war continues to escalate."
Oil prices spiked almost nine per cent in early trade on Monday, supporting ASX-listed energy shares.
The gains for those stocks, along with for basic materials and consumer staples, cushioned the bourse, as all other eight sectors fell into the red.
Woodside and Santos each gained about six per cent in early trade, while coal producers also gained and uranium stocks were flat to negative.
But Qantas shares dived about six per cent as several key Middle East airports cancelled flights and nations across the region closed airspace.
Basic materials rose 1.3 per cent, as investors bought up gold stocks, with the precious metal soaring 1.6 per cent to a four-week high of $US5,393 ($A7,634) an ounce, before easing to $US5,327.
Major ASX-listed gold miners Northern Star (+4.1 per cent), Evolution (+5.5 per cent) and Newmont (+5.4 per cent) all charged higher as investors increased their safe haven exposure.
BHP was trading flat by midday at $58.40 per share after pipping its record high in each session the week before, while Rio Tinto made modest gains and Fortescue dipped 4.5 per cent.
Iron ore futures briefly spiked above $US101 a tonne when markets reopened to its highest in two weeks, before easing to around $US99.45 a tonne.
Critical minerals producers also gained, with most lithium or rare earths miners up about two per cent and tracking with higher expected demand for the defence-linked commodity class.
In company news, shares in Horizon Oil surged more than six per cent by lunchtime as it flagged a market buyout of Cue Energy.
Lynas Rare Earths gained more than four per cent after its Malaysian operating licence was for another 10 years until 2036.
Defence stocks also jumped, with Droneshield rising more than 12 per cent, shipbuilder Austal gaining 2.9 per cent and Betashares Global Defence ETF up 4.5 per cent.
The heavyweight financials sector fell 2.7 per cent amid soured risk sentiment, as each of the big four banks traded at least two per cent lower.
Elsewhere, Magellan Financial Group went into a trading halt after it announced plans to merge with Barenjoey Capital Partners.
Consumer staples stocks were the only other success story outside of energy and basic materials.
Coles rebounded from an apparently overzealous post-earnings sell-off on Friday, while competitor Woolworths was hanging on to the gains that followed its favourable financials.
Consumer discretionary stocks edged lower, as Flight Centre and Web Travel dropped more than five per cent each as the Iran conflict threw international travel into disarray.
Meanwhile, Star Entertainment fell four per cent to 12 cents as investors digested the casino owner-operator's near-$110 million first-half loss, featured in interim results quietly released to the market on Friday night.
The Australian dollar was buying 70.88 US cents, slipping from 71.26 US cents on Friday at 5pm.
