The ASX is set to open slightly lower on Thursday, with futures down 24.9 points (-0.29%) at 9:45 am AEST, following a powerful global rally that has pushed markets sharply higher over the past two sessions.
After back-to-back gains locally, the softer start suggests investors may be taking a breather, even as risk appetite continues to build globally on the back of easing energy prices and ceasefire optimism.
Global markets extend relief rally
Wall Street delivered its strongest session in more than a year overnight, with the S&P 500 rising 2.51%, the Dow Jones up 2.85% and the Nasdaq climbing 2.80%.
The rally was broad-based, with nearly every sector advancing at least 2%, led by industrials, materials and communication services. Energy stocks were the clear outlier, falling sharply as oil prices tumbled.
Markets are now firmly in risk-on mode, with volatility easing and positioning rapidly shifting. The VIX dropped more than 18% to near 21, while the S&P 500 notched its sixth straight day of gains and has now largely erased its recent pullback.
The move reflects a rapid unwind of geopolitical risk premiums following the US–Iran ceasefire, with investors rotating back into growth and cyclical sectors that had been under pressure.
Oil plunges but uncertainty lingers
The most dramatic move came in energy markets.
WTI crude fell more than 14% to around US$96.50 a barrel, marking one of the sharpest pullbacks in recent years as traders priced in a reduced risk of supply disruption.
However, the underlying situation remains far from resolved. Shipping through the Strait of Hormuz is still severely restricted, with only a fraction of normal tanker traffic moving through the region, and physical crude markets continuing to trade at elevated premiums.
Gold was broadly flat at around US$4,712/oz after earlier gains, while copper surged more than 3%, reflecting renewed confidence in global growth and industrial demand.
The divergence highlights a market that is shifting back towards risk — but not yet fully convinced the crisis has passed.
ASX surges on rotation into growth
Locally, the S&P/ASX 200 jumped 223 points, or 2.56%, to 8,951.8 on Wednesday, marking its strongest session of the year.
The rally was driven by a sharp rotation into sectors that had lagged during the recent volatility:
- Information technology surged 7.31%
- Materials rose 4.47%
- Real estate gained 3.91%
- Consumer discretionary climbed 3.53%
In contrast, energy stocks fell heavily as oil prices reversed, highlighting the speed of the shift in market positioning.
Among notable movers:
- Bellevue Gold surged 18.9% on strong quarterly cash flow
- Virgin Australia jumped 11.7% and Qantas gained 9.4% as fuel cost expectations eased
- Pro Medicus rose 8.3% after securing a new contract
The strength extended across the market, with the All Tech index up 6.44% and the Small Ordinaries gaining more than 4%.
Commodities and currencies
Currency markets reflected the improving risk backdrop, with the Australian dollar holding around US$0.70 after recent gains.
Bond markets were relatively steady, with US 10-year yields hovering near 4.29%, while the sharp drop in volatility points to a broader easing in defensive positioning.
Commodities remain mixed, with oil pulling back sharply while copper jumped more than 3% on renewed growth optimism and gold held near record highs.
What to watch today
In quiet early small cap news flow, Alkane Resources Ltd (ASX:ALK, OTC:ALKEF) has reported quarterly production of 45,776oz gold equivalent and a $130 million lift in cash and bullion to $362 million, while maintaining full-year guidance.
Beyond corporate updates, with little on the domestic calendar, markets are likely to remain focused on offshore developments.
- US data (overnight): Core PCE inflation and GDP figures will be key for rate expectations
- Ceasefire developments: Ongoing negotiations and any signs of disruption in the Middle East remain critical
- Energy markets: Traders will be watching whether oil stabilises after its sharp fall
After a rapid shift from panic to optimism, the next phase may be less about direction and more about consolidation.
For now, markets have embraced the relief rally — but with key risks still unresolved, the pace of gains may start to moderate.