Foreign Minister Penny Wong says her country's sanctions target 2 Israeli politicians involved in 'extremist settler project'

Foreign Minister Penny Wong says Australia is "alarmed" by the escalation in tensions between Israel and Iran.

Israel’s strikes came after its spy agency ... Anthony Albanese said he was concerned by the military ­escalation in the region, although he declared Australia was “very conscious of the threat of Iran ­becoming a nuclear state”.

The Australian sharemarket fell slightly during Friday’s trading as fears of the fallout between Israel and Iran resulted in a broad sell-off on the market and investors rush to safe havens including gold.

President Trump did warn of a possible strike, but the press reports made it seem as if a strike was not imminent. The dollar is stronger against all the G10 currencies and most emerging market currencies;

Australia's Prime Minister Anthony Albanese said condemnation by the U.S. and Israel of sanctions imposed on two far-right Israeli cabinet ministers was "predictable", and that the two men had impeded a two-state solution.

A number of Iranian drones and missiles are expected to penetrate Israel’s formidable multi-layered Iron Dome defence shield in the coming days, despite the country’s world-leading defensive military infrastructure.

Secretary of State Marco Rubio condemned five nations that imposed sanctions on two controversial Israeli officials and called for a "reversal of the sanctions."

The pound fell on Friday, in sync with other volatile currencies such as the Australian dollar, after Israel launched a flurry of strikes on Iran, sending investors scurrying into the relative safety of the dollar.

The Australian dollar falls heavily against the US dollar, losing 1 per cent against the greenback in the space of a couple of hours on the news of Israel's air strikes on Iran. The Aussie is often seen as a proxy for global financial and political instability.