Trump gives markets hope, ASX on edge
Staff writers
Updated ,first published
Australian stock markets rose at the open as oil prices fell on rising hopes for an end to the Middle East conflict, even though US President Donald Trump said he had told his representatives not to rush into any deal with Iran.
The S&P/ASX 200 was up 6.7 points, or 0.1 per cent, at 8,663.70 in early trade. Crude oil fell 5 percent to its lowest level in more than two weeks and the U.S. dollar weakened on expectations that a deal to reopen the Strait of Hormuz and restore oil flows could be imminent.
The United States and Iran are moving closer to a deal, senior U.S. officials said, but negotiations on key language are ongoing and final approval by both sides could still take several days. The United States will not rush to reach a deal, Trump wrote on Truth Social.
He wrote that the US blockade of Iranian shipping in the Strait of Hormuz “will remain in full force until an agreement is reached, ratified and signed.”
A day earlier, Trump said Washington and Iran were “substantially negotiating” a memorandum of understanding for a peace deal that would reopen the Strait of Hormuz, which before the conflict carried one-fifth of global oil and liquefied natural gas shipments.
Trump has repeatedly raised the possibility of a deal that would end the war that the United States and Israel started on February 28.
“Upside momentum looks set to pick up,” IG analyst Tony Sycamore said in a note to clients. Although any deal could still fall through, “financial markets appear likely to be skeptical of the reports at this point.”
Energy stocks fell in early trading, driven by falling crude oil prices. Woodside Energy lost 3.1 percent and Santos lost 2.6 percent. Refinery Ampol and Viva Energy lost 1.7 percent and 2 percent respectively. Kerry Stokes’ Beach Energy fell 2.2 per cent after announcing it was selling a 50 per cent stake in an offshore gas field in Victoria’s Otway basin to rival producer Amplitude Energy, which is racing to bring more gas to the southern market.
Mining stocks are on the rise; BHP gained 0.2 percent and Rio Tinto gained 0.5 percent. Fortescue gained 0.1 percent after the company announced that its former chief executive and executive director, Elizabeth Gaines, will step down from the board on June 30. Gold miners rose as the price of the precious metal rose on expectations that a deal to reopen the Strait of Hormuz would ease inflationary pressures. Northern Star was up 5.2 percent and Evolution Mining was up 2.5 percent in early trade.
Financial stocks are weaker; Commonwealth Bank and ANZ Bank lost 0.5 per cent, National Australia Bank lost 0.2 per cent and Westpac lost 0.3 per cent.
Technology stocks were stronger, with WiseTech up 1.4 per cent, Xero up 0.6 per cent, Technology One up 1.3 per cent and NEXTDC up 0.1 per cent.
The Australian dollar jumped on the back of US dollar weakness. The Australian Dollar was trading at 71.57¢ at 10.18 AEST.
On Friday, the gap between Wall Street and most U.S. households widened further as U.S. stocks completed their eighth straight week of gains, their best streak since 2023. This is despite one survey showing that U.S. consumers are feeling even worse about the economy.
The S&P 500 rose 0.4 percent, approaching its all-time high in the middle of last week. The Dow Jones gained 294 points, or 0.6 percent, while the Nasdaq composite gained 0.2 percent.
On Wall Street, Estee Lauder gained 11.9 percent after it said it was no longer considering a possible merger with Spanish fragrance and beauty products company Puig.
Workday rose 5.2 percent and Zoom Communications rose 9.2 percent after both reported better earnings than analysts expected in the latest quarter.
These are the latest companies to top analysts’ earnings expectations for the start of 2026, and a deluge of such reports has helped keep U.S. stocks near their records. Stock prices tend to follow the path of corporate profits over the long term.
The strength comes even after a survey of U.S. consumers by the University of Michigan found that confidence has fallen to a record low and bottomed out in 2022, with inflation rising above 9 percent. Households are concerned about how bad inflation is now due to expensive oil created by the war with Iran.
The yield on the 10-year Treasury note fell to 4.56 percent but is still well above its pre-war level of 3.97 percent.
Concerns about inflation have risen so much that traders on Wall Street have eliminated bets that the Fed would continue to cut interest rates later this year. Low interest rates can stimulate the economy but can also worsen inflation.
Chairman Christopher Waller, a key member of the Fed, said in his speech: “If I believe that inflation expectations are beginning to destabilize, I would not hesitate to support increasing the federal funds rate target range.”
However, in his speech titled “Policy Risks Have Changed,” he also said that this is no longer the case. Instead, he said, “it’s time to sit back and watch the conflict and the data evolve.”
