ASX soars in $57b relief rally on hopes war will end soon; miners jump

The Australian sharemarket moved on from its rollercoaster in March to surge 2.2 per cent on Wednesday, giving investors a $57 billion windfall on hopes the Iran war that has jolted global markets and disrupted energy supplies may soon be over.

The ASX/S&P 200 jumped 190 points to 8671.80 in a bullish session that saw ten of its 11 sectors advancing amid growing optimism that the Middle East conflict will end after comments from US President Donald Trump and Iran’s President Masoud Pezeshkian. The Australian dollar was stronger at US69.10¢.

“Markets have taken it on the chin for over a month and expectations may have hit a low enough point that any glimmer of hope is now much more valuable,” said Michael Bailey at FBB Capital Partners.

The local relief rally came after the S&P 500 leaped 2.9 per cent for its largest gain since May overnight. Just a day before, worries about the war were still nagging at the main measure of Wall Street’s health, putting it close to a 10 per cent correction from its all-time high set early this year. The Dow Jones rallied 2.5 per cent overnight, while the Nasdaq composite jumped 3.8 per cent

Optimism entered markets on Tuesday afternoon after The Wall Street Journal reported that Trump told aides he was willing to end the US war against Iran even if the Strait of Hormuz remained largely closed. Trump, who will give an address to the nation early on Thursday AEDT to provide an “important update” on Iran, said the Islamic Republic could still reach a deal with the US. He added, however, that an agreement with Tehran was not a prerequisite for the war to conclude.

Meanwhile, Iran has “the necessary will to end this war,” but expects certain requirements to be met “especially the essential guarantees to prevent the recurrence of aggression,” the Iranian President Masoud Pezeshkian told the president of the European Council, Antonio Costa, in a call on Tuesday.

“Markets are reading this as a full-on positive, in that we see an end to the conflict,” said Nick Twidale, chief market analyst at AT Global Markets in Sydney. “Personally, I’m not convinced over the longer term. I think we have more news-driven volatility in the days ahead, and investors will soon want concrete evidence that the end of the war is in sight.”

Trump also said the US will be leaving Iran “very soon” and that it was likely Iran would no longer blockade the strait, a crucial passageway for about 20 per cent of the world’s oil, once the US concluded its operation.

Oil prices steadied after an earlier dip on the news. The price for a barrel of Brent crude, the international standard, was up 0.7 per cent at $US104.65 ($151.15) late afternoon AEDT. Benchmark US crude rose 1.2 per cent to $US102.57 ($148.15).

The market is “certainly looking for a reason to rally,” said Jack Janasiewicz, portfolio manager at Natixis Investment Managers. “The question for us — how real is this?”

Local stocks surged higher, with mining stocks leading the charge. BHP jumped 4.3 per cent, Rio Tinto rose 3.5 per cent and Fortescue added 3.8 per cent amid hopes an end to the war will limit its damage on the global economy, and resource demand. Gold stocks roared higher, as the price of the safe haven continued to strengthen. Northern Star bounced 8.6 per cent, Evolution Mining added 8.2 per cent and Newmont gained 4.5 per cent. South 32, which owns the biggest silver mine in Australia, climbed 4.9 per cent.

The big four banks all finished stronger, bolstering the ASX. Commonwealth Bank rose 2.5 per cent, Westpac added 1.5 per cent, National Australia Bank rose 1.2 per cent and ANZ Bank advanced 1.1 per cent. ‘Millionaires’ Factory’ Macquarie gained 3.3 per cent.

Energy stocks initially lost ground, but then turned positive as oil prices ticked higher again and uranium stocks rallied. Woodside Energy and Santos both edged up 0.1 per cent, while fellow fossil fuel providers Yancoal and Whitehaven Coal were down 1.1 per cent and 0.2 per cent, respectively. Uranium producers Paladin and Deep Yellow surged 6.9 per cent and 9.2 per cent.

Meanwhile, as a possible end to the war that has crippled global aviation and forced tens of thousands of flight cancellations spells good news for airlines, Qantas and Virgin Australia rose 3.6 per cent and 0.8 per cent, respectively, while travel agent Flight Centre jumped 4.8 per cent.

Other consumer-related stocks ticked higher as well, with Officeworks and Bunnings owner Wesfarmers 0.7 per cent, JB Hi-Fi up 1.4 per cent and kitchen appliance maker Breville climbing 5.3 per cent. Eagers Automotive, which sells BYD electric cars in Australia, soared 9.5 per cent, adding to its recent gains after announcing it bought two Audi dealerships in Victoria and a 49 per cent stake in a car dealership group on the Gold Coast and in Sydney.

Tech stocks also took off, with software makers WiseTech, Xero and Technology One up 2.5 per cent, 4.1 per cent and 4 per cent, respectively, and AI data centre operator Next DC climbing 3.5 per cent as they tracked their peers on Wall Street, where bargain hunters waded back into the sector.

On Wall Street, sliding oil prices helped stocks of companies that have big fuel bills. United Airlines soared 8.1 per cent, and Norwegian Cruise Line Holding steamed 5.9 per cent higher to trim their losses for the year so far.

Tech stocks were the strongest forces lifting the market in a widespread rally where four out of every five stocks within the S&P 500 rose. Marvell Technology shot up 12.8 per cent after chipmaker Nvidia invested $US2 billion ($2.9 billion) in the company and announced a partnership with it. Nvidia rose 5.6 per cent and was the single strongest force lifting the S&P 500.

Centessa Pharmaceuticals soared 44 per cent after Eli Lilly said it was buying the company working on treatments for excessive daytime sleepiness and other neurological conditions. Lilly, which is paying up to $US7.8 billion if certain conditions are met, rose 3.7 per cent

Bond yields remained lower following a couple of reports on Tuesday on the US economy that came in better than economists expected. One said confidence among US consumers unexpectedly improved. The other said US employers were advertising more job openings at the end of February than expected, though fewer than the month before.

Elsewhere, artificial intelligence giant OpenAI completed a deal to raise $US122 billion from investors at an $US852 billion valuation, marking the company’s largest funding round to date and bolstering its costly push for more chips, data centres and talent.

with AP, Bloomberg

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