Oil price up, local shares to bounce back; US markets steady
Staff writers
Updated ,first published
Australia’s stock market opened higher on Tuesday, tracking gains on Wall Street, as US President Donald Trump raised hopes of a deal with Iran despite the entry into force of a blockade of the Strait of Hormuz. Qantas fell after a profit warning due to war-induced jet fuel price shock.
The S&P/ASX rose 41.7 points, or 0.5 per cent, to 8967.70 by 10:54 AEST, with nine of the 11 industrial sectors in the green. The rebound came after the local stock market fell 0.4 percent on Monday following a poor performance in technology stocks and as investors reacted to news that U.S.-Iran talks have collapsed and Trump vowed to block the key oil transit route.
The Australian dollar fell 0.1 percent to 70.88¢.
Cyclical sectors led the gains amid renewed optimism about resolving the conflict that has negatively impacted the world economy. Technology stocks rose sharply, with software firms WiseTech Global and Xero gaining 4.8 percent and 4.4 percent, and data center operator NextDC gaining 4.1 percent.
Iron ore and copper giants BHP (up 2%), Rio Tinto (up 1.6%) and Fortescue (up 1%) also traded higher. On the consumer front, Bunnings and Officeworks owner Wesfarmers (up 1.6 per cent) and furniture retailer Harvey Norman (up 1 per cent) rose, while data center owner Goodman Group (up 3 per cent) and shopping center landlords Scentre (up 1.4 per cent) and Vicinity (up 1 per cent) boosted real estate investment trusts’ earnings.
Qantas fell 1.2 per cent after it raised its fuel cost outlook and postponed a planned share buyback, citing skyrocketing jet fuel prices since the war in the Middle East cut off oil supplies. The airline said jet fuel prices have more than doubled, pushing its estimated fuel bill for the second half of fiscal 2026 to between $3.1 billion and $3.3 billion, up from a previous estimate of $2.2 billion.
Westpac lost 1.5 percent. The country’s second-largest lender raised its provisions for potential bad loans to 10 basis points of average gross loans, up from the previous 6 basis points, and said the “expected slowdown in economic growth” due to the war “will create a more challenging environment for some customers.” It also warned that first-half profits would take a $75 million hit from the sale of its RAMS mortgage portfolio.
Energy stocks also fell as oil prices fell on signs that Washington and Tehran may revive peace talks following the start of the US blockade. West Texas Intermediate fell to $96 a barrel while Brent neared $99 on Monday. The two sides are discussing further negotiations for a longer-term ceasefire before the two-week ceasefire ends on April 22, sources said. Oil and gas giants Woodside and Santos lost 0.9 percent and 1.4 percent respectively, while fellow fossil fuel producer Yancoal also fell 1.9 percent.
Cleanaway lost 3 percent after the waste management company cut its earnings forecast this year by $20 million due to rising fuel and logistics costs due to the war.
Overnight on Wall Street, US stocks closed at session highs and moved back into the green after Trump said he still wanted to make a deal with Iran following a deadlock in peace talks and blockade of the strait. The S&P 500 rose 1 percent to its highest level since late February.
Gains were helped by the oil market, where prices briefly rose above US$100 a barrel after 21-hour ceasefire talks to end the conflict collapsed over the weekend, then pared their bounce as the session progressed. And these moves were much more modest than the extreme volatility that has hit financial markets since the war began in late February.
The moves followed Trump’s claim that Iran had reached out to his administration about possible peace talks, as the United States imposed a naval blockade of the Strait of Hormuz in the seventh week of the war. With Tehran yet to confirm further talks, investors remain wary of new volatility as the risk of an uptick remains.
“Markets really want to give peace a chance as tensions between the United States and Iran ease, emphasizing the positives and downplaying the negatives,” said Capital.com analyst Kyle Rodda. “Despite this, the risk of further volatility remains high, with headline risk continuing to drive action.”
And as with many statements made so far in the US-Iran war, much will depend on the details of the blockade and what exactly will be restricted.
“Not all blockades are created equal,” said Brian Jacobsen, chief economic strategist at Annex Wealth Management.
“34 ships passed through the Strait of Hormuz yesterday, by far the highest number since this stupid incident,” Trump said on the social media platform on Monday. [Iran] The shutdown has begun.”
Meanwhile, major US companies are starting to tell investors how much money they made in the first three months of the year. Strong reports could help offset worries about the Strait of Hormuz on Wall Street because stock prices tend to follow the trend of corporate profits over the long term.
Investment bank Goldman Sachs said it made $5.63 billion in profit in the quarter, more than investors expected. But financial analysts noted some potentially worrying signals, including declining income from trading fixed income, commodities and currencies. Its shares fell 2.3 percent.
Oracle’s 11.2 percent gain was the biggest gain in the S&P 500, helping Oracle offset some of the sharp loss it suffered for the year on concerns it might be spending too much to develop its artificial intelligence capabilities.
In the bond market, Treasury yields have remained relatively stable. The yield on the 10-year Treasury note remained at 4.31 percent late Friday.
With AP, Reuters, Bloomberg
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