The Australian sharemarket snapped a three-week winning streak on Friday, as the escalating conflict in the Middle East sent traders fleeing equities and pulled shares down from record highs touched a week earlier.

The S&P/ASX 200 ended Friday’s session 55.2 points or 0.7 per cent lower at 8150 points, dragging the bourse to a weekly loss of 0.8 per cent, its first since early September. Of the ASX’s 11 sectors, nine ended the session lower.

Traders fled equities and bid up oil prices after US President Joe Biden said overnight on Thursday that the US was “discussing” a potential retaliatory attack on Iranian oil assets by Israel. Oil prices surged more than 5 per cent following the comments. West Texas Intermediate and Brent crude largely held those gains during trading on Friday, sending the energy sector up 1.8 per cent.

Woodside gained 2.2 per cent to $26.64 and Santos was 2.1 per cent higher at $7.30. Smaller oil and gas players also benefited. Horizon Oil, which has oil and gas projects in New Zealand, Papua New Guinea and China, rose 7.5 per cent to 21.5¢. Australian energy developer Strike Energy was up 9.5 per cent to 23¢ and Karoon Energy rose 2.2 per cent to $1.65. Petrol retailer Viva Energy gained 3.1 per cent to $3.02.

Miners were the worst hit amid signs the previous week’s rush towards the sector – sparked by renewed stimulus efforts from the Chinese government – was losing steam. BHP fell 1.7 per cent to $44.58 and Rio Tinto 1.9 per cent to $3.02. Banks also declined – Commonwealth Bank dropped 1.4 per cent to $132.74 and Westpac 1.9 per cent to $30.14.

Stocks in focus

Small-cap tech developer Electro Optic Systems added 5.1 per cent to $1.54 as traders bet that rising tensions in the Middle East could mean more demand for its defence technology. In July, its revenue soared in the first half because of a rise in weapon systems orders from an undisclosed Middle East client.

Shares in Light & Wonder rallied 7.8 per cent to $140.69 after the gaming company said it intended to develop a new version of its popular Dragon Train game, following an intellectual property dispute with Aristocrat Leisure this year.

Regal Partners added 2 per cent to $3.55. The asset manager has topped $17 billion in funds under management as its takeover talks with fellow wealth giant Platinum Asset Management advance, and the two groups will enter due diligence this week. Platinum shares added 1.7 per cent to $1.23.

Fellow asset manager Magellan Financial fell 3.2 per cent to $9.62 after reporting $200 million in outflows during September.