Middle East tension sees Oil awaken, driving huge gains in energy markets

Markets are fearing the worst, after President Joe Biden said the US is discussing potential support for attacks on Iranian oil facilities. This uncertainty is rattling investors. The ASX200 $S&P/ASX 200 (.XJO.AU)$ fell on Friday losing 1% and is now down 1.2% this week, while the S&P 500 $S&P 500 Index (.SPX.US)$ has fallen less than that. But the technical indicators for both the US and Australian markets are now showing that the recent rally from a month ago, is losing momentum and there’s risk a pull back.

But consider, -there’s always a bull market somewhere. Oil is up 9% in just five days, driven by Middle east tensions. If the tension rises, oil will probably climb higher, benefiting Australian energy stocks. For example, Karoon $Karoon Energy Ltd (KAR.AU)$ is up 4%, with Beach Energy $Beach Energy Ltd (BPT.AU)$ and Woodside $Woodside Energy Group Ltd (WDS.AU)$, Australia's largest oil and gas company, following suit today. Broadly, The ASX energy sector is already up 12% in just under a month.

In the coal space, Whitehaven Coal $Whitehaven Coal Ltd (WHC.AU)$ has risen 31% in four weeks due to a strong coal price, boosted by China’s stimulus. But be cautious—coal prices have dipped for three days, as markets wait for concrete signs that China’s stimulus will drive commodity demand.

Lastly, watch Australia’s largest tech stock, Block $Block (SQ.US)$, $Block Inc (SQ2.AU)$, known for owning Afterpay and Square terminals, saw its stock rise after BMO Capital reiterated it as a BUY, although they lowered their price target to $92. Morningstar also recently called Block a BUY with a $135 target