The Australian share market is heading towards its worst weekly performance since the US-Iran war began, as rising oil prices put pressure on bond yields and increase concerns about higher borrowing costs.

The benchmark S&P/ASX 200 index fell 112.2 points by midday on Friday, leaving it down 1.27 per cent for the day. The broader All Ordinaries index dropped 120 points, or 1.33 per cent.

The ASX 200 was on track for a 3.2 per cent decline across the week, which would make it the market’s worst weekly performance since early March, when the index fell 3.8 per cent amid the escalation of the US-Iran conflict.

Higher oil prices have added pressure to financial markets by raising concerns about inflation and the potential for central banks to keep borrowing costs higher for longer.

The Australian dollar was trading at 71.56 US cents, down from 72.16 US cents at 5pm on Thursday.

The latest decline comes as global financial markets continue to assess the economic impact of the conflict and its effect on energy prices, inflation and interest-rate expectations.

Source: AAP report carried by The Guardian