How do dividend adjustments work on my Index CFD position?
Lachlan Meakin
20/9/2021
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Cash stock indices such as the Dow 30, FTSE 100 and ASX 200 are made up of constituent stocks which is where their price is derived from. These constituent stocks of an index will periodically pay dividends to shareholders, causing a drop in that stocks price and impacting the overall value of the index. With GO Markets this index adjustment will be made at the open of the index on the ex-dividend date of the underlying stock(s).
This price drop in the index will affect the PnL on an open index CFD trade, to compensate this, there will be credit or debit that will be included in the swap that is made around 00:00 server time. If you have a long index position you PnL will be negatively affected so you will receive a credit in the same amount as the dividend adjustment. If you have a short index position you PnL will be positively affected so you will receive a debit in the same amount as the dividend adjustment.
It’s an important point to remember that index traders do not profit or loss from these adjustments. It is a zero sum situation where any PnL change has a corresponding debit or credit to compensate. Example 1: You have a buy position on the ASX200 contract of 10 lots at 00:00 server time.
The next trading day multiple companies go ex-dividend resulting in a 20 point drop in the ASX200 at the open. The swap on this position will be credited $200 AUD (20 points * $10 per point exposure). The ASX200 will open 20 points lower than it would have without the adjustment.
As a result, the PnL on the buy position is $200 worse off, which was compensated for by the swap credit you received. Example 2: You have a sell position on the FTSE100 contract of 10 lots at 00:00 server time. The next trading day multiple companies go ex-dividend resulting in a 15 point drop in the FTSE100 at the next open.
The swap on this position will be debited £150 GBP (15 points * £10 per point exposure). The FTSE100 will open 15 points lower than it would have without the adjustment. As a result, the PnL on the sell position is £150 better off, which was compensated for by the swap debit you received. (Please note, as dividends are combined with normal financing adjustments, the swap will not be exactly the same as the dividend only) You can view the trading hours and upcoming swap/dividend adjustments in the specifications of an instrument.
Example of ASX200 before a 20 point adjustment below:
By
Lachlan Meakin
Head of Research, GO Markets Australia.
The information provided is of general nature only and does not take into account your personal objectives, financial situations or needs. Before acting on any information provided, you should consider whether the information is suitable for you and your personal circumstances and if necessary, seek appropriate professional advice. All opinions, conclusions, forecasts or recommendations are reasonably held at the time of compilation but are subject to change without notice. Past performance is not an indication of future performance. Go Markets Pty Ltd, ABN 85 081 864 039, AFSL 254963 is a CFD issuer, and trading carries significant risks and is not suitable for everyone. You do not own or have any interest in the rights to the underlying assets. You should consider the appropriateness by reviewing our TMD, FSG, PDS and other CFD legal documents to ensure you understand the risks before you invest in CFDs. These documents are available here.
Volatility headlines can encourage rushed decisions and for leveraged products like CFDs, acting without a plan can increase the risk of losses. During times like this, a pattern does emerge.
This isn’t about being “wrong” so much as it’s about skipping the emotional reaction between headline and trade idea.
Translation: The headline isn’t your signal. Your process is.
Middle East flare-ups, sanctions, shipping disruptions, regional security shocks? This is your general checklist for assessing how geopolitical developments may affect markets.
Note: This article provides general information only and is not financial advice. It does not take into account your objectives, financial situation or needs. CFDs are complex, leveraged products and carry a high risk of loss. Consider whether trading CFDs is appropriate for you and refer to the relevant disclosure documents before trading.
Step 1. Identify the driver
Here’s the trap: “Iran” is not the driver. “Conflict” is not the driver. Those are categories useful for cable news but too broad for a risk-defined CFD trade. What moves markets is the mechanism that got worse today than it was yesterday. Separate the headline from the specific mechanism.
Key energy shipping chokepoints (including the Strait of Hormuz and the Suez Canal) are often monitored during periods of heightened tension.
Driver A: Energy risk
This is the Strait of Hormuz, shipping lanes, insurance and rerouting story. In Iran flare-ups, markets care because the threat isn’t just “war,” it’s friction in oil logistics including tankers avoiding routes, insurance premiums surging and temporarily suspended transits. When Hormuz risk gets priced, oil prices may react quickly where markets perceive increased shipping or supply risk, which can influence inflation expectations.
Driver B: Supply risk
This is not “ships are nervous.” This is about production outages, infrastructure hits, refinery disruptions and export constraints. This driver tends to matter more when the headline implies physical damage or credible near-term capacity loss.
Driver C: Funding stress
This is the under-discussed engine of ugly CFD outcomes: the “who needs dollars right now?” problem. This is not “risk-off vibes,” this is liquidity tightening, the kind that makes markets move together and can coincide with wider spreads, slippage and faster price moves, which may affect execution.
In an Iran flare-up, funding stress shows up when participants stop debating the headline and start doing the mechanical work of de-risking: broad USD demand, carry trades unwinding and correlated selling across risk assets. And here’s the key filter that stops you from overreacting: the USD tends to strengthen persistently and broadly mainly during severe funding stress, not every routine fear spike.
Driver D: Policy amplification
This is not about tensions rising so much as the rules changing, the kind of change that outlives the headline cycle and forces real repricing because it alters incentives, access, or flows. The Iran conflict headlines won’t stay local if policy escalates them through sanctions (supply, payments, shipping, insurance), changes to retaliation rules, or shifts in central bank reaction functions as oil risk feeds into inflation risk. That can harden rate expectations.
This is where “geopolitics” stops being narrative and becomes policy constraint and policy constraints tend to create follow-through because they change what market participants can do, not just what they think.
Before acting on a headline
If you choose to monitor breaking news, consider pausing before trading and checking whether the development is new, whether there are observable real-world constraints, and how markets are reacting. Don’t ask ‘is this bullish for gold?’. Instead, consider:
Is this a flow story, a barrel story, a funding story, or a policy story?
Is it new information or a remix of what markets already knew?
Is there evidence of real-world constraint (shipping behaviour, insurance, official measures), or just rhetoric?”
Step 2. Identify the key markets
Some traders stick to a small set of markets they know well, especially when headlines hit. Liquidity and spreads can change fast. If you try to watch everything, you may end up trading your own adrenaline rather than the market.
1) Oil (WTI or Brent proxy)
If the driver is energy flow risk or supply risk, oil is usually the first and cleanest repricing channel—risk premium, inflation impulse, and global growth expectations all run through here.
2) USD conditions (DXY proxy or your most tradable USD pairs)
Not because the USD is always “safe haven,” but because it’s the funding layer under everything. In true stress, you’ll see broad USD strength; in “headline stress,” you often won’t.
3) Gold
Gold is not “up on fear” by default, its fear filtered through USD and real yields. If USD funding stress ramps up, gold can be pulled in different directions and this is why traders get whipsawed: they trade the story, not the cross-currents.
4) A volatility gauge (execution risk, not ideology)
This can help gauge whether conditions may lead to wider spreads, slippage or faster moves.
5) The instrument you actually trade
For a lot of CFD traders, this is where the Iran shock becomes your problem in the form of local markets and local positioning and USD pairs.
Don’t map by habit, map by driver
Energy flow risk? Oil first, then risk indices, then FX linked to risk/commodities.
Funding stress? USD conditions first, then JPY crosses, then equities.
Policy shock? Watch oil + USD together—policy can tighten both simultaneously.
Translation: For some traders, focus comes from watching fewer markets that are most relevant to the driver they’re assessing.
Step 3. Check the charts that matter
Before considering any trade setup, some traders do a quick ‘triage’ check. The aim isn’t prediction, it’s checking whether fast markets could mean wider spreads, slippage or sharper moves in leveraged products like CFDs.
Chart A: Oil
What you’re checking: Is the market pricing real disruption risk, or just reacting? In Iran-related flare-ups, “Hormuz risk” narratives tend to show up as a risk premium conversation in oil, often faster than it shows up in equities or FX.
Examples of chart features some traders look at include
Is price breaking and holding above a prior structure level? (Not just spiking).
Did it gap and then fill? (Often means headline heat > real constraint).
Is the move continuing during liquid sessions, or only during thin hours? (Thin-hours moves are where CFD spreads can punish you the most).
Translation: Oil indicates whether the Iran story may become an inflation/flow story or just a screen-flash.
Chart B: USD
What you’re checking: Is this turning into a funding event? The USD doesn’t “safe-haven” on schedule. In some episodes of severe global funding stress, the USD has strengthened broadly and persistently, although this isn’t consistent across all headline-driven spikes.
Practical CFD filters:
Broad USD strength across multiple pairs (not just one cross doing something weird).
Commodity FX vs USD (AUD, CAD proxies) behaving like risk is truly tightening.
JPY crosses as a stress indicator (carry unwind tells the truth quickly).
If USD is not confirming, that’s information. It often means: headline risk is loud, but global liquidity isn’t actually panicking.
Translation: USD indicates whether the Iran headline is “market stress”… or “market noise with wider spreads and higher execution risk.”
Chart C: Volatility
What you’re checking: How dangerous normal sizing has become.
Use a sizing governor that forces honesty:
Normal ranges → normal size
~1.5× typical range expansion → consider half size
~2× range expansion → quarter size or stand aside
Some traders reduce position size or choose not to trade when ranges expand materially versus usual conditions. Any sizing approach depends on individual circumstances and risk tolerance.
Because in CFDs, volatility doesn’t just change directionality, it changes execution quality, stop distance, and how fast a loss becomes a margin problem.
Translation: Volatility is your permission slip or your stop sign.
Daily volatility chart | Source: Google Finance
Step 4. Choose a setup type
Geopolitics creates volatility but it doesm't guarantee trend.
Pick structure, not opinion
Breakout: after the market forms a post-headline range.
Pullback: once trend is established and liquidity steadies.
Mean reversion: only if the spike stalls and structure confirms.
Common mistake: picking direction first, then hunting confirmation.
Translation: The setup is the response to price behaviour, not your worldview.
Step 5. Define risk
From a general risk-management perspective, traders often define that a trade idea is not complete until it has
Entry condition: what must happen for you to participate
Invalidation: where you are wrong
Position size: based on dollars-at-risk, not conviction
Session max loss: daily or weekly cap (protects you from spiral trading)
For CFDs specifically, regulators emphasise how leverage can accelerate losses, and why protections such as margin close-out arrangements, leverage limits and negative balance protection (where applicable) exist.
The Australian Securities Exchange (ASX) is one of the world's top 20 exchanges, hosting over 2,000 listed companies worth approximately $2 trillion.
Quick Facts:
The ASX operates as Australia's primary stock exchange, combining market trading, clearinghouse operations, and trade and payment settlement.
It represents roughly 80% of the Australian equity market value through its flagship ASX 200 index.
2,000+ companies and 300+ ETFs are listed on the exchange, spanning from mining giants to tech innovators.
How does the ASX work?
The ASX combines three critical functions in one system.
As a market operator, it provides the electronic platform where buyers and sellers meet. Trading occurs through a sophisticated computer system that matches orders in milliseconds, replacing the traditional floor-based trading that once defined stock exchanges globally.
The exchange also acts as a clearinghouse, ensuring trades settle correctly. When you buy shares, the ASX guarantees the transaction completes, managing the transfer of securities and funds between parties.
Finally, it serves as a payments facilitator, processing the money flows that accompany each trade. This integrated approach reduces settlement risk and keeps the market running smoothly.
What are ASX trading hours?
The ASX operates from 10:00am to 4:00pm Sydney time (AEST/AEDT) on business days, with a pre-open phase from 7:00am.
Stocks open alphabetically in staggered intervals starting at 10:00am, followed by continuous trading until the closing auction at 4:00pm.
The exchange observes Australian public holidays and adjusts for daylight saving time between October and April, which can affect coordination with international markets.
ASX trading hours by time zone:
Phase
Sydney (AEST)
Tokyo (JST)
London (BST)
New York (EDT)
Pre-Open
7:00am - 10:00am
6:00am - 9:00am
10:00pm - 1:00am
5:00pm - 8:00pm*
Normal Trading
10:00am - 4:00pm
9:00am - 3:00pm
1:00am - 7:00am
8:00pm - 2:00am*
Closing Auction
4:00pm - 4:10pm
3:00pm - 3:10pm
7:00am - 7:10am
2:00am - 2:10am
*Previous day. Note: Times shown assume daylight saving time in effect (AEST/BST/EDT). Japan does not observe daylight saving. Time differences vary when regions switch between standard and daylight saving at different dates.
Top ASX Indices
S&P/ASX 200
This is the exchange's flagship index. It tracks the 200 largest companies by market capitalisation and represents approximately 80% of Australia's equity market.
It serves as the primary benchmark for most investors and fund managers and is rebalanced quarterly to ensure it reflects the current market leaders.
The ASX also breaks down into 11 sector-specific indices, allowing investors to track performance in areas like financials, materials, healthcare, and technology.
These indices can help identify which parts of the Australian economy are strengthening or weakening.
ASX sector breakdown as of 31 December 2025. Source: S&P Global
Financials dominates as the largest sector, driven by Commonwealth Bank, NAB, Westpac, and ANZ. These banking giants provide lending, wealth management, and insurance services across Australia.
Materials ranks second, led by mining powerhouses BHP and Rio Tinto. This sector extracts and processes resources, including iron ore, coal, copper, and gold.
Consumer Discretionary includes retailers, media companies, and hospitality groups that benefit when household spending rises.
Industrials encompasses construction firms, airlines, and professional services businesses.
Healthcare features companies like CSL, a global biotech leader, and Cochlear, which produces hearing implants.
Real Estate features property developers and Real Estate Investment Trusts (REITs) that own and manage commercial and residential assets.
Communication Services includes telecommunications providers like Telstra alongside media and entertainment companies.
Energy tracks oil and gas producers (many renewable energy companies typically fall under utilities).
Consumer Staples covers essential goods providers like supermarkets and food producers.
Information Technology includes software developers and IT services firms.
Utilities covers electricity, gas, and water suppliers, including renewable energy.
ASX sector breakdown:
ASX Symbol
Sector
Top Stocks
% of ASX 200
XFJ
Financials
CBA, NAB, ANZ
33.4%
XMJ
Materials
Orica, Amcor, BHP
23.2%
XDJ
Consumer Discretionary
Harvey Norman, Crown
7.4%
XNJ
Industrials
Qantas, Transurban
7.4%
XHJ
Health Care
ResMed, CSL and Cochlear
7.1%
XRE
Real Estate
Mirvac, LendLease, Westfield
6.7%
XTJXIJ
Communication Services
Telstra, Airtasker
3.7%
XEJ
Energy
Santos, Woodside
3.6%
XSJ
Consumer Staples
Woolworths, Westfarmers
3.4%
XIJ
Information Technology
Dicker Data, Xero
2.5%
XUJ
Utilities
AGL, APA Group
1.4%
Data accurate as of 31 December 2025. Source: SP Global
Top ASX companies
Three companies consistently lead the S&P/ASX 200 by market capitalisation.
Commonwealth Bank (Mkt cap: A$259 bln)
Commonwealth Bank holds the top position on the ASX as Australia's biggest lender.
Founded in 1911 and fully privatised by 1996, CBA offers retail banking, business lending, wealth management, and insurance.
Its performance often signals the health of the domestic economy.
BHP Group (Mkt cap: A$241 bln)
BHP Group stands as the world's largest mining company.
Its diversified portfolio spans iron ore, copper, coal, and nickel operations globally.
It serves as a bellwether for Australian commodity markets.
CSL Limited (Mkt cap: A$182 bln)
CSL Limited leads the Australian healthcare sector as a global biotech firm.
Established in 1916, CSL develops treatments for rare diseases and manufactures influenza vaccines.
The company demonstrates Australian innovation competing on the world stage.
The ASX serves as a vital mechanism for capital formation in Australia. It tends to provide price signals that reflect market expectations.
When share prices rise, it suggests optimism about economic conditions. Falling markets may indicate concerns about future growth.
Australian companies raise funds through initial public offerings and follow-on share sales on the ASX, using proceeds to expand operations, fund research, or pay down debt.
Investors in these shares benefit from potential capital gains and dividend income. Many Australians build retirement savings through superannuation funds that invest heavily in ASX-listed companies.
Employment in financial services also depends partly on a healthy stock market. Brokers, analysts, fund managers, and supporting roles exist because of active capital markets.
Key takeaways
The ASX functions as a market operator, clearinghouse, and payments facilitator, providing the infrastructure that enables capital formation and supports retirement savings for millions of Australians.
Its flagship index, the S&P/ASX 200, tracks the 200 largest companies and captures about 80% of market capitalisation, while the All Ordinaries index covers the top 500.
Financials and Materials dominate the exchange, led by Commonwealth Bank, BHP, and CSL, reflecting Australia's strength in banking and resources.
In 2025, the S&P 500 traded around 6,835 and was up approximately 16% year to date (YTD). Market direction remained most sensitive to Federal Reserve expectations, inflation data and the earnings outlook, with returns also shaped by mega-cap tech leadership and the broader AI narrative. The index pulled back from earlier December highs, but it has so far held above key major moving averages (MA).
Key 2025 drivers included:
Fed expectations and inflation: Inflation cooled through the year but remained sticky around 2.5% to 3%. A Fed easing bias likely supported price to earnings (P/E) multiples and “risk-on” positioning. More recently, markets appeared increasingly rate-sensitive, with the decreased likelihood of an additional rate cut until March 2026.
Earnings and guidance: Corporate earnings remained strong quarter on quarter. Recent Q3 results reportedly saw over 80% of the S&P 500 beat earnings per share (EPS) expectations. For Q4, the estimated year-over-year earnings growth rate is 8.1%, despite ongoing concerns around import tariffs and potential margin pressure.
Index leadership and breadth: Returns were heavily influenced by mega-cap tech and AI beneficiaries, even as broader market breadth appeared less consistent at points through the year.
Policy headlines and volatility: Trade and tariff headlines drove sharp moves, particularly earlier in the year. Some investors pointed to the “TACO” trade, with rapid recoveries after policy proposals were softened. Over time, similar shocks appeared to have less impact as the market became somewhat desensitised.
Valuations and sensitivity: The forward 12-month P/E ratio for the S&P 500 is 22, above the 5-year average (20.0) and above the 10-year average (18.7). That gap kept valuation sensitivity, especially in AI-linked names, firmly in focus.
Current state
The S&P 500 is about 1% below record highs hit earlier in December. That could indicate the broader uptrend remains in place, with a move back toward the recent highs one possible scenario if momentum improves. Despite the recent retracement, the index remains above all key major moving averages (MA). The latest bounce followed lower than expected CPI numbers earlier this week, alongside continued, and to some, surprising optimism about what may come next.
What to watch in January
Q4 earnings from mid-January: Results and guidance may help clarify whether valuations are being supported by forward expectations.
AI narrative and positioning: With AI-linked mega-caps carrying a large share of market capitalisation, changes in sentiment or expectations could have an outsized impact on index performance.
US jobs and CPI data: The latest US jobs report reportedly points to the highest headline unemployment rate since 2021. Cooling inflation this week may keep markets alert to shifts in rate cut timing, particularly around the March decision.
S&P 500 daily chart
Source: TradingView
Major FX pairs
Source: Adobe Images
AUD/USD
AUD/USD has been choppy in 2025. Since the “redemption day” drop in April, the move has looked more like a steady grind higher than a clean upside trend.
Key levels Recent peaks in early September and mid-December highlight resistance near 0.6625. Support has been evident around 0.6425, where price bounced over the last month.
What is supporting the bounce That support test coincided with stronger than expected jobs and inflation data, lifting expectations that the Reserve Bank of Australia (RBA) may raise rates during 2026 rather than cut again. The latest pullback looks contained so far, with buying interest already visible and price still above key longer-term moving averages.
What could drive a breakout The pair remains range-bound, but the tilt is still constructive. If Chinese data stays firm, metals prices hold up, and the central bank outlook remains relatively hawkish, a break above resistance could gain more traction.
AUD/USD daily chart
EUR/USD
After early 2025 euro strength, EUR/USD has mostly consolidated since June in a roughly 270 pip range. This month tested 1.18 resistance, reaching highs not seen since September.
What price is doing now The recent pullback still lacks strong downside conviction. Some technical analysts refer to the 1.17 area as a near-term reference level.
What could come next If price holds 1.17 and buyers step back in, another push toward 1.18 is possible. One view is that the European Central Bank (ECB) could be less inclined to ease in 2026, which could be consistent with a firmer EUR/USD scenario. Broader analyst commentary also suggests the euro may stall rather than collapse against the US dollar, although outcomes remain data and policy dependent.
EUR/USD daily chart
USD/JPY
Year-to-date picture USD/JPY is close to flat overall for the year. After US dollar weakness in Q1, the pair reversed higher and now sits just below resistance near 158.
Rates remain the main driver Rate differentials still favour the US dollar. The Bank of Japan (BOJ) held steady for much of the period despite expectations it might act, and the recent rate increase was modest. Policy has only moved marginally away from zero.
What could shift the balance Rate differentials remain a key influence. Without a clearer shift in BOJ policy, the JPY may find it difficult to sustain a rebound. Some market commentators cite 154.20 as a chart reference level.
ASX defence stocks are back on more watchlists and according to the Stockholm International Peace Research Institute (SIPRI), global military spending reached approximately US$2.718 trillion in 2024, up 9.4% in real terms.
Australia’s current defence settings are set out in the 2024 National Defence Strategy and related investment planning documents, which outline long-term capability funding priorities. Furthermore, Canberra has pointed to A$330 billion of capability investment through 2034, including added funding for surface combatants, preparedness, long-range strike and autonomous systems.
Here is the part most people miss: not all ASX defence stocks are the same trade. Some sit close to naval shipbuilding. Some are counter-drone names and some are smaller, higher-risk operators where one contract may matter much more than the market assumes.
These five names are not a buy list, rather they are a practical watchlist for investors trying to understand where procurement momentum may actually show up on the ASX.
1) Austal (ASX: ASB)
Austal is one of the ASX-listed companies most directly exposed to Australia’s naval shipbuilding pipeline, although contract execution, margins and delivery timing remain important variables.
They aren't just winning random contracts; they have signed a massive legal agreement (the Strategic Shipbuilding Agreement) that makes them the official partner for building Australia's next generation of mid-sized military ships in Western Australia.
In February 2026, the government gave Austal the green light on a $4 billion project. This isn't for just one ship, it’s for 8 "Landing Craft Heavy" vessels. These are huge transport ships (about 100 metres long) designed to carry heavy tanks and equipment directly onto a beach. But here is the part most people miss, shipbuilding is a marathon, not a sprint.
As you can see in the delivery timeline, while construction starts in 2026, the final ship won't be delivered until 2038. For an investor, this means Austal has a "guaranteed" stream of income for the next 12 years, but they have to be very good at managing their costs over that long period to actually make a profit.
2) DroneShield (ASX: DRO)
If you have seen footage of small drones disrupting modern battlefields, DroneShield is building part of the "off switch". Its focus is counter-drone technology, including systems that detect, disrupt or defeat drones using electronic warfare, sensors and software-led tools, rather than relying only on traditional munitions.
By early 2026, DroneShield had moved beyond the label of a promising start-up and into a much larger commercial phase. It reported FY2025 revenue of A$216.5 million, up 276% from FY2024, and said it started FY2026 with A$103.5 million in committed revenue.
One point the market may overlook is the software layer in the model. DroneShield reported A$11.6 million in Software as a Service (SaaS) revenue in FY2025 and said it is working towards SaaS making up 30% of revenue within five years. Its subscription model includes software updates for deployed systems, which adds a growing stream of recurring revenue alongside hardware sales.
Among ASX defence stocks, DroneShield is one of the most direct ways to follow the counter-UAS theme. It is also one of the names where sentiment can swing quickly, because growth stories can rerate both up and down when order timing changes.
EOS builds both the "brain" and the "muscle" for military platforms. It is best known for remote weapon systems, which allow operators to control armed turrets from inside protected vehicles, and for high-energy laser systems aimed at counter-drone defence. EOS has said its unconditional backlog reached about A$459.1 million in early 2026, following a series of contract wins through 2025. That points to a much larger base of secured work, although delivery timing and revenue conversion still matter.
EOS signed a €71.4 million, about A$125 million, contract with a European customer for a 100-kilowatt high-energy laser weapon system. EOS says the system is designed for a low cost per shot and can engage up to 20 drones a minute. The Australian Government has set aside A$1.3 billion over 10 years for counter-drone capability acquisition, and EOS has disclosed that it was part of a successful LAND 156 bid team. That does not guarantee future revenue, but it does support medium-term visibility in a market the company is already targeting.
EOS reads as a rebound story, but one that still depends on execution. The company has reoriented around remote weapon systems, counter-drone systems and lasers, all areas tied to stronger defence spending. The key question is whether it can keep converting backlog and pipeline into delivered revenue while maintaining balance-sheet discipline.
4) Codan (ASX: CDA)
Codan is sometimes left out of casual defence stock lists because it is more diversified. That may be an oversight. In its H1 FY26 results, Codan said its Communications business designs mission-critical communications for global military and public safety markets. Communications revenue rose 19% to A$221.8 million. The company also said DTC delivered strong growth from defence and unmanned systems demand, with unmanned systems revenue up 68% to A$73 million. Codan said about half of that unmanned revenue was linked to operational defence applications in conflict zones.
This is where the story becomes more nuanced. In a basket of ASX defence stocks, Codan may offer a different profile, with less pure headline sensitivity, broader operating diversification and meaningful exposure to military communications and unmanned systems without being a single-theme name. That diversification may also mean the stock does not always trade like a pure-play defence name.
HighCom sits at the speculative end of this list, and it should be labelled that way. The company says its two continuing businesses are HighCom Armor, which supplies ballistic protection, and HighCom Technology, which supplies and maintains small and medium uncrewed aerial systems, counter-uncrewed aerial systems, and related engineering, integration, maintenance and logistics support for the ADF and other aligned regional militaries.
In H1 FY26, revenue from continuing operations fell 59% to A$10.9 million, while EBITDA moved to a A$5.4 million loss from a A$1.9 million profit a year earlier. HighCom also disclosed A$5.1 million in HighCom Technology revenue, including A$3.5 million from small uncrewed aerial systems (SUAS) spare parts and A$1.6 million from sustainment services provided to the Australian Department of Defence.
So yes, HighCom is one of the more financially sensitive ASX defence stocks on the board. But it is also the kind of smaller name that can show how procurement filters down into support, sustainment and specialist protection gear.
Key market observations
Track program milestones, not just political headlines. Contract awards, manufacturing starts, delivery schedules and sustainment work often matter more than a single announcement day.
Separate pure-play exposure from diversified exposure. DroneShield and EOS are closer to concentrated defence technology themes, while Codan brings communications exposure within a broader business mix.
Watch sovereign capability themes in Australia. Austal and EOS are tied to local manufacturing, integration and Australian supply chains, which supports the broader sovereign capability theme in this group.
Pay attention to balance sheets and cash conversion. Procurement momentum can be real even when timing gets messy. HighCom's latest half is a reminder of that.
Defence headlines can look immediate. Earnings usually are not. Austal's major naval work stretches into the next decade. EOS contracts are delivered over multiple years. DroneShield's order flow appears strong, but the company still separates committed revenue from broader pipeline opportunity. HighCom shows the other side of the coin. Exposure to procurement does not automatically translate into smooth financial execution.
References to ASX-listed defence stocks are general information only, not a recommendation to buy, sell or hold any security or CFD. These stocks can be highly volatile and are sensitive to contract timing, government policy, geopolitics, execution risk and market conditions. Backlog, pipeline and revenue expectations are not guarantees of future performance.
Three central banks are deciding rates simultaneously, Brent crude is swinging wildly around US$100 a barrel, and a war in the Middle East is rewriting the inflation outlook in real time. Whatever happens this week could set the tone for markets for the rest of 2026.
Quick facts
The Reserve Bank of Australia (RBA) announces its next cash rate decision on Tuesday, with markets now pricing a 66% chance of a second hike to 4.1%.
Some analysts have warned the Iran war could push US inflation to 3.5% by year-end and delay Fed rate cuts until September, making this week's FOMC dot plot the most closely watched in years.
Brent crude is flirting with US$100 a barrel after Iran launched what state media described as its "most intense operation since the beginning of the war."
RBA: Will Australia hike again?
The RBA raised the cash rate for the first time in two years to 3.85% at its February meeting after inflation picked up materially in the second half of 2025.
The question now is whether it moves again before even seeing the next quarterly CPI print, which isn't due until 29 April.
Deputy Governor Andrew Hauser acknowledged ahead of the meeting that policymakers face a genuinely divided decision, shaped by conflicting economic signals at home and growing instability abroad.
Financial markets currently assign around a 66% probability to another hike, with a May increase considered virtually certain regardless of what happens Monday.
The FOMC meets on March 17–18, with the policy statement scheduled for 2:00 pm ET on March 18 and Chair Jerome Powell's press conference at 2:30 pm. CME FedWatch shows a 99% probability that the Fed holds rates at 3.50% to 3.75%.
The real action is in the Summary of Economic Projections (SEP) and dot plot. The current median dot shows one 25-basis-point cut for 2026. If it shifts to two cuts, that is dovish and bullish for risk assets. If it shifts to zero cuts or adds a rate hike into the projection, markets could react in the other direction.
Further complicating matters, Powell's term as Federal Reserve Chair expires on May 23, 2026. Kevin Warsh is the leading candidate to replace him, viewed as more hawkish on monetary policy. Any comment from Powell on this transition could move markets independently of the rate decision itself.
Bank of Japan: Further tightening could be brought forward
The BOJ meets on March 18–19, with the decision expected Thursday morning Tokyo time. The current policy rate sits at 0.75% (a 30-year high), and the January 2026 meeting produced a hold in an 8-1 vote.
Governor Ueda has categorised the March meeting as "live," noting the timeline for further tightening could be "brought forward" if Shunto spring wage negotiations yield stronger-than-expected results.
Those results are due to begin flowing in during the week, making them the critical input for the BOJ's decision. Nomura expects 2026 Shunto wage hikes to come in around 5.0%, including seniority, with base pay growth of approximately 3.4%. If results confirm that trajectory, the case for a March hike strengthens considerably.
The complication is the global backdrop. Japan imports roughly 90% of its energy needs, and oil around US$100 per barrel is pushing up import costs and threatening to add inflationary pressure. A BOJ hike into a global oil shock would be an unusually bold move.
Most market participants still lean toward a hold at this meeting, with April or July seen as the more likely timing for the next move.
Brent crude briefly touched US$119.50 per barrel earlier in the week before dropping 17% to below US$80, then rebounding toward US$95 on mixed signals from Washington about the Strait of Hormuz.
As of Thursday, Brent was back over US$100 as Iran launched fresh attacks on commercial shipping and the IEA reserve release failed to bring meaningful relief.
In the scenario where a longer conflict inflicts damage to energy infrastructure, analysts estimate CPI could rise to 3.5% by the end of 2026, with gasoline prices approaching US$5 per gallon in the second quarter.
For this week, oil acts as a macro meta-variable. Every geopolitical headline, ceasefire signal, tanker attack, reserve release, and Trump comment could move equities, bonds and currencies in real time.
US-Israeli strikes on Iran launched on 28 February sent Brent crude surging past US$119 a barrel, gold above US$5,200, and defence stocks to all-time highs.
Against that backdrop, investors are focusing on a small group of commodity-linked names that may remain sensitive to further moves in oil, LNG and gold. The key question is whether the shock proves sustained, or whether a ceasefire, shipping normalisation, or policy action removes part of the geopolitical risk premium.
1. ExxonMobil (NYSE: XOM)
ExxonMobil has been one of the clearest beneficiaries of the price surge. Shares hit a record high of US$159.60 in early March and are up approximately 28% year-to-date.
The company produces 4.7 million barrels of oil equivalent per day, has a Permian Basin breakeven of around US$35/barrel, and is committed to US$20 billion in buybacks for 2026.
Wells Fargo raised its price target to US$183 from US$156 following the escalation, while broader analyst consensus sits around US$140–$144. However, XOM is already trading above many consensus targets, and disruption to its LNG partner QatarEnergy poses a near-term operational headwind.
Chevron touched a new 52-week high of US$196.76 in early March and has risen approximately 24% year-to-date.
The company's Brent breakeven for dividends and capital expenditure sits around US$50/barrel. This means that at current Oil prices above US$90, it is generating significant free cash flow.
However, Chevron has temporarily halted operations at a gas field off Israel's coast following missile activity in the region, and the stock has since pulled back more than 1% as the conflict directly affects its operations.
What to watch
Direct operational updates from Chevron's Middle East and Israeli assets.
Any further halts that could weigh on near-term production.
With Qatar having halted output after Iranian drone strikes, buyers across Asia and Europe are scrambling for alternative supply. Woodside, as one of Australia's largest LNG producers and exporters, sits outside the conflict zone and is well-positioned to benefit from rerouted demand.
Analysts caution that actual substitution takes time due to shipping and contract constraints, meaning the price uplift may be more durable than a simple spot trade. European TTF benchmark gas prices surged over 50% in a week, amplifying the margin environment for non-Middle Eastern LNG producers.
What to watch
The pace and timeline of any Qatar LNG production restart.
If QatarEnergy remains offline for weeks, Woodside could begin re-contracting European buyers at elevated spot prices.
An Australian dollar move higher could be a headwind worth tracking for USD-denominated earnings.
4. Cheniere Energy (NYSE: LNG)
Alongside Woodside, Cheniere is the most direct US beneficiary of the Qatar LNG disruption. As the largest LNG exporter in the United States, it saw intraday strength at the start of the conflict week.
US domestic energy production has buffered American consumers from the worst of the shock, but the export premium has widened as European and Asian buyers pay up for non-Gulf supply.
The trade is "geopolitically sensitive," and any resolution could reverse upside quickly. But for as long as Hormuz and Gulf gas infrastructure remain compromised, Cheniere is positioned to benefit structurally.
What to watch
Any diplomatic breakthrough that reopens Gulf shipping lanes.
Announcements of new long-term offtake contracts signed at current elevated prices.
Gold surged 5.2% in a single session on 1 March, touching US$5,246/oz, as markets sought safe-haven assets. Newmont, the world's largest gold producer, has seen its reserves effectively revalued at these prices.
It is up alongside gold's 24% year-to-date gain, and its all-in sustaining costs remain largely fixed.
However, Gold miners sold off sharply on 4 March, and Newmont fell nearly 8% in a single session as broader risk-off deleveraging hit precious metals equities.
The stock has recovered since, but volatility remains high. For longer-duration investors, analysts note that "safe" mining jurisdictions such as Canada, Australia, and Nevada are commanding fresh premiums as Middle East instability raises the value of geopolitically secure supply.
What to watch
Whether gold can hold above US$5,000/oz.
A prolonged conflict could accelerate an M&A cycle in junior gold miners.
A ceasefire or broad equity deleveraging event as the primary risk to monitor.
Lockheed Martin reached a new all-time high of US$676.70 on 3 March, up over 4% for the day. Its F-35 fighters, precision-guided munitions, THAAD systems, and HIMARS rocket artillery are central to the ongoing air campaign.
The US Department of Defence is moving to replenish munitions stockpiles, and Trump's stated ambition to raise the US defence budget to US$1.5 trillion by 2027 adds a longer-term structural tailwind beyond the immediate conflict.
Defence stocks are rising amid classic geopolitical risk pricing, but investors should note that actual contract flow takes time to translate into earnings, and valuations already reflect considerable optimism.
What to watch
The pace of US Department of Defence munitions replenishment orders.
How quickly contract wins translate into backlog growth.
Barrick is tracking gold's historic run alongside Newmont, with the stock up sharply year-to-date. It sits at a roughly US$78 billion market capitalisation and is reporting record free cash flow projections as its all-in sustaining costs remain well below current spot prices.
Like Newmont, it experienced a sharp single-session selloff of more than 8% during the broader 4 March deleveraging event, before partially recovering.
Royalty and streaming companies such as Wheaton Precious Metals (WPM) are being favoured by some investors as a more inflation-protected way to access gold upside, given their lower operational cost exposure. But Barrick remains one of the world’s largest listed gold miners, with earnings that are highly sensitive to changes in the gold price
What to watch
Gold's ability to hold above US$5,000/oz.
Any Barrick moves toward junior miner acquisitions.
Energy cost inflation, as rising fuel prices could begin to squeeze miner operating margins.
