Australian shares are poised to open sharply higher, with futures pointing to a strong rebound as easing tensions in the Middle East boost global risk sentiment.
ASX 200 futures were up 151 points, or 1.8%, to 8567 at 7.20am AEDT, after earlier gains above 2% moderated as markets digested conflicting signals on US-Iran negotiations.
The lift follows comments from US President Donald Trump indicating “productive talks” with Iran and a delay to planned strikes on energy infrastructure, although Tehran quickly disputed that any discussions had taken place.
ASX falls to 10-month low amid Middle East escalation
The local market ended Monday sharply lower, hitting its weakest level in 10 months as fears of a broader conflict intensified.
The S&P/ASX 200 dropped 62.5 points, or 0.7%, to 8365.9, after falling as much as 2% intraday and briefly entering correction territory. The index is now down 9.1% from its March peak, erasing more than $300 billion in value.
Energy stocks remained a key support, with oil prices surging above $US112 a barrel on fears Iran could close the Strait of Hormuz. Ampol rose 1% to $33.44, Santos added 1% to $8.06 and Woodside Energy climbed 2.2% to $34.79.
However, weakness across mining stocks weighed on the index as gold fell 2.7% to $US4375 an ounce, dampening rate-cut expectations.
US markets rally as strike fears ease
Wall Street rallied overnight, though gains faded late in the session as uncertainty around US-Iran negotiations persisted.
The Dow Jones rose 1.4%, the S&P 500 gained 1.2% and the Nasdaq added 1.4%, with all 11 sectors finishing higher, led by consumer discretionary stocks.
Airlines and cruise operators surged on the sharp drop in oil prices, with American Airlines and United Airlines up close to 5%, while Carnival and Norwegian Cruise Line rose more than 6%.
Bank stocks also stabilised after recent losses, with JPMorgan and Goldman Sachs gaining 1.9% and 2.2%, respectively.
Oil prices tumbled as much as 14% intraday before settling about 11% lower, reflecting hopes of de-escalation. However, analysts warned volatility could persist.
European markets rebound, energy stocks lag
European equities snapped a three-day losing streak, supported by the same easing geopolitical concerns.
The pan-European FTSEurofirst 300 index rose 0.7%, with Germany’s DAX and Spain’s IBEX both up more than 1%. The UK’s FTSE 100 edged 0.2% lower.
Energy stocks underperformed, falling 1.7% as oil prices dropped sharply, while airlines rebounded strongly. Air France gained 3.9% and Lufthansa rose 3.4%.
In corporate news, Telecom Italia jumped 4.7% after Poste Italiane launched a €10.8 billion takeover bid.
Currencies lift as risk appetite improves
Currencies strengthened against the US dollar as investor sentiment improved following signs of de-escalation.
- The euro rose 0.7% to US$1.1610.
- The Japanese yen gained 0.7% to ¥158.43.
- The Australian dollar climbed 0.7% to US$0.7008.
- US Treasury yields also eased, with the 10-year yield falling 4 basis points to 4.34% and the 2-year yield down to 3.85%.
Commodities tumble on easing supply fears
- Brent crude fell nearly 11% to around US$99.94 a barrel after earlier plunging as much as 14%.
- Gold briefly slipped below US$4400 an ounce before settling down 3.7% at US$4407, as safe-haven demand eased.
- Base metals were mixed, with copper rising 1.8% on improved risk sentiment, while aluminium fell 0.8% amid supply chain adjustments.
- Iron ore edged 0.1% higher to US$106 a tonne, supported by elevated freight costs.
Outlook
Markets remain highly sensitive to developments in the Middle East, with analysts noting that confirmation of de-escalation—particularly through resumed oil flows via the Strait of Hormuz—will be critical for sustaining the current rebound.