SYDNEY — Australian shares retreated on Tuesday, with the benchmark S&P/ASX 200 index closing at 8,665.1 after shedding 26.9 points, or 0.31%, as investors grappled with renewed geopolitical tensions, rising oil prices and higher global bond yields.

The modest decline came after the index had climbed to 8,692 points in the previous session. Trading volume was solid but reflected cautious sentiment amid developments in the Middle East and ongoing concerns about inflation and interest rates. The market traded within a range, hitting an intraday high near 8,692 before pulling back.

Energy stocks faced mixed pressure after oil prices rebounded following U.S. military strikes on Iranian targets. While some earlier optimism around a potential U.S.-Iran peace deal had eased crude prices, fresh defensive actions by Washington pushed Brent crude higher, creating volatility in the resources sector.

Mining and materials shares showed resilience in parts but could not offset broader weakness. Financials and real estate sectors faced headwinds from elevated bond yields, as U.S. Treasury rates remained firm and influenced global borrowing costs.

The session highlighted the ASX's sensitivity to international factors. With Wall Street closed for Memorial Day, local traders took cues from European markets and commodity movements. Geopolitical risks in the Middle East continued to dominate headlines, with potential implications for energy supply and inflation.

Analysts noted that persistent concerns over global debt levels and inflation have kept bond yields elevated, weighing on growth-sensitive sectors. Higher yields increase borrowing costs for companies and households, potentially slowing economic activity in Australia.

The Reserve Bank of........

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