ASX Surges 1.85% on Iran Ceasefire Hopes & Lower Inflation Data
ASX Surges as Ceasefire Hopes Emerge in Iran Conflict
The Australian share market experienced its largest single-day gain in nearly a year on Wednesday, surging 1.85 percent to 8,534.3, as investors reacted positively to reports of a potential ceasefire in the escalating conflict between the United States and Iran. The broader All Ordinaries index rose by 2.03 percent to 8,745.3, adding more than $56 billion to market capitalization after weeks of volatility.
The rally followed reports, citing an unnamed US official, that the Trump administration had sent a 15-point peace plan to Iran via Pakistani negotiators. While Tehran has yet to confirm the proposal, the news sparked optimism among investors, overshadowing earlier concerns about potential escalation following reports of a planned deployment of 2,000 additional US paratroopers to the Middle East.
“The market seemed to seize on the optimistic view expressed by the US president and ignore all other news flow, and that is sort of supporting the markets,” Moomoo market strategist Michael McCarthy told AAP.
Mining stocks, which had been heavily impacted by the geopolitical uncertainty, led the market’s rebound. The basic materials sector jumped more than 4 percent, lifting itself out of bear market territory. BHP Group saw a 3.3 percent increase, closing at $50.12, while Rio Tinto advanced 1.6 percent after receiving $2 billion in government subsidies to maintain operations at its Boyne aluminium smelter.
Gold miners also benefited from the shift in sentiment, with Newmont, Evolution, and Northern Star experiencing gains of up to 8.9 percent as the price of gold rose to $US4,559 ($6,538) an ounce. This increase came as some safe-haven demand eased with the prospect of de-escalation.
Energy stocks, however, showed a more muted response. Brent crude oil prices fell more than 4 percent in Asian trade, impacting Woodside and Santos. Uranium stocks also rebounded from recent selling pressure.
Airlines Qantas and Virgin Australia saw significant gains, rising 4 percent and 11.5 percent respectively, driven by hopes that a ceasefire would alleviate disruptions to flights in the Middle East. Virgin Australia is the only Australian airline offering direct flights to the region.
The financials sector also contributed to the market’s gains, rising 1.3 percent, with three of the four major banks posting increases. NAB, however, continued to underperform, remaining down almost 10 percent since the conflict began.
February’s inflation figures, released earlier in the day, also contributed to the positive market sentiment. The Consumer Price Index (CPI) rose 3.7 percent in the year to February, a slight decrease from the previous month and below market expectations. However, these figures do not fully reflect the impact of rising energy prices since the start of the war in Iran.