Very excellent news has been received. A naval engagement between United States of America and Japanese forces on 4th May resulted in the following damage to the enemy: one light cruiser, two destroyers, four gun-boats and one supply vessel were sunk. One 9,000-ton aircraft tender, one light cruiser and one cargo vessel were damaged. Six enemy aircraft were destroyed. This highly successful action took place in the vicinity of the Solomon Islands. It was accomplished with the loss of only three aircraft.
[Prime Minister John Curtin, House of Representatives, Friday 8 May 1942, Hansard, Volume 170, p1028]
The Japanese ultimately decided not to invade the Australian mainland during World War II, but they did intend to cut Australia's supply lines from America. They planned to begin their attack from Rabaul, New Britain, and from there to blockade Australia from bases they would establish on various Pacific island groups: Fiji, the New Hebrides, Samoa and the Solomons.
In early May 1942, the Japanese despatched an invasion fleet from Rabaul to take Port Moresby, Papua. They also sent a carrier force to patrol into the Coral Sea to intercept any American carriers sent to thwart their planned attack. The Japanese landed at Tulagi in the Solomons on 2 May. At the same time, their invasion fleet, protected by carrier air support, headed towards Port Moresby on the south coast of Papua.
The Allies, who had cracked the main Japanese codes, intercepted and deciphered Japanese radio messages; an American carrier force, supported by Australian cruisers and destroyers, was waiting to intercept the invaders. The Americans with ships from two carrier forces, including the aircraft carriers Yorktown and Lexington, were under the command of Rear Admiral Fletcher of the United States Navy (USN). The Australian-born Royal Naval officer Rear Admiral John Crace commanded the Australian ships Hobart and Australia in the joint taskforce.
On 7 May, American aircraft sank the Japanese auxiliary carrier Shoho. The next day the Japanese located and attacked the American carrier USS Lexington, which caught fire and sank later the same afternoon. Both the American carrier USS Yorktown and the Japanese carrier Shokaku were damaged on 8 May, and the Japanese withdrew.
The Battle of the Coral Sea was the largest naval battle ever fought so close to Australia. It was fought entirely by aircraft attacking ships; the opposing ships did not fire at each other at any time during the battle. More importantly, it was the first time the Japanese had been halted during their southwards advance in the Pacific.
Just a month later, the Japanese suffered a major defeat at the Battle of Midway, when the Americans sank four Japanese aircraft carriers within a matter of hours. From early June 1942, the Japanese abandoned their plans for the capture of places like Fiji, Samoa and the New Hebrides. They no longer possessed the ability to cut Australia off from American support and the two battles reinforced the alliance between Australia and America.