Weekly optimism on the Australian Securities Exchange faded on Monday as geopolitical tensions in the Middle East resurfaced and earnings season delivered an early setback for bank investors.

Israel's rejection of the United States' proposed peace plan for the Middle East sent oil prices higher on Monday, dampening the positive momentum that had built through the previous week. Rising crude prices typically benefit Australia's energy sector, though the broader market reacted cautiously as renewed instability revived concerns about inflationary pressures that could complicate the global rate-cut cycle.

Gold prices provided some support for Australian investors, holding firm above $4,300 an ounce (USD) at the time of writing. The precious metal's strength reflects its traditional safe-haven appeal during periods of geopolitical uncertainty, a dynamic that benefits Australia's listed gold miners and helps offset weakness elsewhere in the materials sector. Sentiment was also bolstered by widespread expectations that the Reserve Bank of Australia (RBA) will hold rates steady at its upcoming meeting, sparing investors from a surprise rate hike.

However, earnings season brought volatility. Westpac shares fell approximately 5% after the bank released its earnings report, which cited weaker economic conditions and, most notably, a 20% decline in mortgage applications during the third quarter. The sharp drop in mortgage demand is widely attributed to the capital gains tax (CGT) property changes introduced in the Labor government's latest budget, adding to growing evidence that the Australian property market is shifting in real time as a result of the new policy. As one of Australia's "Big Four" banks, Westpac's results are closely watched as a bellwether for the broader banking sector and housing market trends.

Elsewhere on the market, Sunrise Energy Metals was among the standout movers. The listed materials stock, which traded below $5 a share a year ago, has climbed toward $20 per share, driven by renewed optimism surrounding potential collaboration with the Trump-led US government. The surge underscores growing strategic interest in critical minerals essential for battery and clean-energy supply chains, a sector where Australia holds significant reserves.

Looking ahead, the RBA's rate decision, expected on Tuesday, will be the most closely watched event of the week. Market participants will also continue monitoring Wall Street's intraday performance and geopolitical developments in the Middle East.

For the ASX200, maintaining levels above 9,000 points this week could be sufficient to sustain a sense of optimism following a challenging period in recent months.

Source: The Market Online Australia

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