Australian tech stocks shed $7 billion as Iran war deepens market rout

Australian technology stocks lost $7 billion in March as the war in Iran pushed oil prices to a 34-month high and forced the Reserve Bank to raise interest rates for the second consecutive month.

The S&P/ASX All Technology Index recorded its worst monthly performance since the pandemic selloff, with investors dumping growth stocks as Brent crude oil surged 55% to close March at $112.78 per barrel. The energy shock has stoked inflation expectations and prompted central banks globally to tighten monetary policy.

WiseTech Global shares have plunged 59% over the past six months, while data centre operator NextDC is down 34%. The sell-off accelerated mid-March after the RBA raised its cash rate by 25 basis points to 4.1%, citing inflation pressures from the Middle East conflict.

Growth stocks hammered by rate rise

Technology stocks, typically valued on future earnings rather than current profits, are highly sensitive to interest rate movements. Higher rates make future cash flows less valuable in present terms, compressing valuations across the sector.

The RBA's March decision marked its second consecutive rate increase in 2026. The board's statement pointed to "strong" housing price growth over the past year and rising wages, but flagged the oil price surge as the immediate inflation trigger.

The exchange rate, money market interest rates and government bond yields have risen over the past month.

Trading Economics data shows Australia's cash rate now sits at 4.1%, up from 3.6% in January. The RBA's March meeting came as international insurance regulators scheduled discussions with the US Treasury Department on private credit markets, reflecting broader concerns about financial system stress.

Oil shock compounds AI disruption fears

The energy crisis has compounded existing anxiety about artificial intelligence disrupting established technology companies. Investors have questioned whether current-generation software providers can defend their market positions as large language models reshape business workflows.

WiseTech Global, which provides cloud-based logistics software, hit a 52-week low of $36.53 on March 30. The stock traded at $39.01 on Wednesday, still down 59% from its October 2025 peak.

Life360, the US-based location sharing app listed on the ASX, rose 6.2% on Wednesday to $19.93 but remains in negative territory year-to-date. NextDC climbed 3.5% to $11.72, while accounting software provider Xero gained 2.2% to $76.80.

Peace hopes spark short-term rally

Australian tech stocks followed US markets higher Wednesday after President Donald Trump told reporters his nation would complete its military campaign in Iran within two to three weeks. The comments sparked a 3.8% rally in the Nasdaq Composite Index, while the S&P 500 gained 2.9%.

"Markets have taken it on the chin for over a month and expectations may have hit a low enough point that any glimmer of hope is now much more valuable," FBB Capital Partners' Michael Bailey told Bloomberg.

Brent crude fell 3.2% to $104 per barrel on Wednesday as Iranian leaders reportedly signalled willingness to end hostilities. The price decline eased immediate inflation concerns, though the barrel remains 70% higher than January levels.

The US Energy Information Administration's Short-Term Energy Outlook shows Brent settled at $94 per barrel on March 9, up about 50% from the beginning of the year and the highest since September 2023. CNBC reported Brent has soared about 55% in March, a record monthly gain for the contract dating back to its 1988 inception.

Analysts warn of premature optimism

Bloomberg strategists cautioned investors may be pricing in peace too quickly. Iranian officials' definition of "essential guarantees" for ending the conflict could prove difficult for Washington to meet, especially if Tehran's conditions mirror those outlined in its response to the US ceasefire proposal.

The broader Australian sharemarket fell 7% in March, according to EconoTimes analysis of Asian markets. The ASX 200 dropped 0.7% to 8,461 on March 30, following an earlier intraday low of 8,379.

Australia's exposure to China amplifies volatility from geopolitical shocks. The CSI 300 and Shanghai Composite indexes each fell 6-7% in March, with Chinese manufacturing and non-manufacturing PMI data offering little relief to investors focused on regional security risks.

Technology stocks across Asia-Pacific faced similar pressure. Singapore's Straits Times index proved relatively resilient, losing just 1.6% for the month.