Australian equities surged, with the S&P/ASX 200 index closing up 1.4% at 9145.80 points, just shy of its March high of 9200.90. This rally followed US President Donald Trump's comments about ongoing negotiations to resolve the conflict in Iran and reopen the Strait of Hormuz, which eased geopolitical concerns and boosted global markets. The broader All Ordinaries index also saw significant gains. This marks the second consecutive session of increased risk appetite, extending Monday's 0.5% rise.
Financial stocks were a major catalyst for the market's ascent, contributing significantly to the ASX's gains. The "big four" banks—CBA, Westpac, National Australia Bank, and ANZ Bank—all posted strong performances, with increases ranging from 1.6% to 3%. Analysts from Morgan Stanley anticipate continued positive results from banks, driven by robust mortgage growth. Technology stocks also powered the gains, alongside a rebound in the energy sector, which rose 0.7% as oil prices recovered after initial drops. Healthcare and real estate sectors also saw gains of 0.9% and 0.7% respectively.
The market's uplift was also influenced by a strong lead from Wall Street, where US stocks rallied due to easing oil prices and reduced inflation worries. Despite initial denials from Iran regarding direct talks with the US, progress in discussions with Oman about the Strait of Hormuz provided some market comfort. However, some caution remains among investors due to the conflicting reports on the US-Iran negotiations. Oil prices, particularly Brent crude, saw fluctuations, trading near $85 a barrel after an almost 5% drop in the previous session, with Trump describing his offer of talks as a "last chance" for Tehran.
