The ASX is set for a strong open on Wednesday, with futures jumping 122.9 points (+1.41%) as of 9:20 am AEST, with a last-minute ceasefire agreement between the US and Iran before President Trump’s Tuesday deadline triggering a sharp lift in global risk sentiment.
The development follows a volatile 24 hours for global markets, with investors again eyeing risk assets following days of volatility tied to the threat of escalation. It builds on Tuesday’s 1.74% rally for the S&P/ASX 200, when buyers returned across sectors in a broad-based rebound.
Wall Street steadies after late turnaround
US markets finished mixed but broadly stable overnight, with the S&P 500 and Nasdaq both edging up around 0.1% while the Dow Jones slipped 0.18%, after recovering earlier losses.
The muted close masked a volatile session, as equities initially sold off following renewed warnings from President Donald Trump before rebounding into the close on hopes of an eleventh-hour diplomatic breakthrough.
A two-week ceasefire agreement brokered by Pakistan has reportedly now been agreed to by both sides, easing immediate concerns around a major disruption to global energy infrastructure and shipping routes, though the temporary nature of the deal is likely to keep investors cautious. Reports overnight of US attacks on Kharg Island, meanwhile, appear to have resulted in no major disruptions there.
Oil eases, but supply pressures remain
Energy markets responded quickly to the shift in tone.
WTI crude fell 3.9% to around US$110/bbl, pulling back from recent highs as traders reacted to the reduced risk of near-term escalation.
Even so, underlying supply constraints remain significant. Production outages across key Middle Eastern producers and tight physical markets suggest oil prices could remain elevated even if tensions continue to ease.
ASX rallies as buyers return across sectors
Locally, the S&P/ASX 200 gained 149.3 points, or 1.74%, to 8,728.8 on Tuesday, with all 11 sectors finishing higher in a broad-based rebound.
The rally was led by previously underperforming sectors, as investors stepped back into growth and cyclical names:
- Information technology jumped 3.98%
- Materials rose 2.61%
- Financials gained 2.16%
- Energy added 1.42%
The strength was broad, with 149 of the ASX 200 constituents finishing higher, signalling a shift in sentiment after recent selling pressure.
Among notable movers:
- Guzman y Gomez surged 18.6% on strong quarterly sales
- NextDC climbed 11.9% after announcing a $1 billion capital raise
- Bank of Queensland rose 6.9% following a capital partnership with Challenger
Smaller stocks also joined in the rally, with the All Tech index up 2.85% and the Small Ordinaries rising 1.26%.
Commodities and currencies
Currency markets reflected the improved risk tone, with the Australian dollar rising 0.25% to US$0.6994.
Bond markets were more mixed, with US 10-year yields edging up to around 4.34%, while volatility remained elevated, with the VIX rising more than 6% to 25.8.
Despite oil’s pullback, broader commodity markets remain firm, reinforcing expectations that supply-side pressures will continue to influence inflation and growth dynamics:
- Gold climbed 1.7% to US$4,730/oz, maintaining strong safe-haven demand
- Copper rose 0.6%, supported by ongoing supply-side pressures
The mix points to a market that is rotating back towards risk, but still hedging against lingering uncertainty.
What to watch today
Attention now turns to how the ceasefire holds — and whether it translates into a more durable de-escalation.
- Ceasefire developments: Markets will be watching closely for signs the agreement holds beyond the initial announcement
- Strait of Hormuz: Any progress towards reopening remains critical for energy markets and the ceasefire agreement itself
- Australian data (11:30am–12:30pm): Consumer and business confidence readings
- FOMC minutes (overnight): Insight into how the Fed is assessing inflation risks linked to energy prices
With markets shifting rapidly from fear to relief, the next phase will likely hinge on whether diplomacy can keep pace with investor optimism.
For now, the tone has turned — but conviction remains tentative.