Qantas, Westpac Warn as Iran Conflict Fuels Stagflation Risk

Australia's major corporates are issuing profit warnings as the Iran-linked Middle East conflict drives fuel costs sharply higher, compressing margins across transport, banking, and consumer sectors. Qantas and Westpac are among the companies signaling earnings pressure, with Qantas exposed directly through jet fuel costs and Westpac flagging deteriorating customer financial conditions. The combination of accelerating input costs and weakening demand creates a stagflationary dynamic, the scenario central banks are least equipped to handle, since rate hikes that combat inflation simultaneously deepen the growth slowdown. Business and consumer sentiment have fallen in tandem, tightening the policy trap for the Reserve Bank of Australia. If fuel prices remain elevated, the RBA faces a binary problem: tolerate above-target inflation or risk choking a softening economy with further tightening. Watch for whether the profit warning cycle broadens beyond transport and financials into retail and logistics, and whether the RBA adjusts its forward guidance at its next meeting in response to the externally driven cost shock.