Investors have piled back into the Australian sharemarket with gusto in a broad-based rally after US President Donald Trump announced a tentative ceasefire between Iran and Israel.

Investors were also heartened by the smooth debut of Virgin Australia and Greatland Gold shares on the local bourse. A rally in banks also helped push Commonwealth Bank to a fresh record.

The benchmark S&P/ASX 200 Index rose 80.6 points, or 1 per cent, to close at 8555.5 on Tuesday – its highest since June 12 – with eight out of 11 sectors flashing green. Energy stocks were the main detractor after a plunge in the oil prices, with utilities also dipping.

‘Massive relief’

“It is risk back on. The banks are proving unstoppable, yet again,” said Atlas Fund Management portfolio manager Phil Cornet.

“It’s pretty amazing to be honest, but there’s just a massive relief rally from the geopolitical escalations, and with that has come a wave of new money that has been sitting on the sidelines. The market is a bull at the gate right now.”

Wall Street rallied overnight and oil dropped after Iran limited its retaliation to US air strikes to US bases in the Middle East, easing fears of all-out war in the region.

Oil then extended its slump and US futures jumped, after Trump posted on social media after the close of US trading that there would be a ceasefire between Israel and Iran that was later confirmed by Israel.

Michelle Bowman, the Federal Reserve’s vice chair for bank supervision, also said she would support lowering interest rates as soon as July, adding a bid to the market.

On the ASX, mining, banks and technology stocks rallied with index heavyweights BHP and Commonwealth Bank, both climbing more than 2 per cent, to close at $36.48 and $188.13, respectively. Pro Medicus jumped 2.6 per cent to $279.34, while Wisetech climbed 2.5 per cent to $108.74.

Travel stocks were well bid, buoyed by a drop in the oil price and Virgin Australia positive debut. The stock traded as high as $3.18 in the first few minutes of trading, before closing at $3.23, an 11.4 per cent gain from its IPO price. Qantas climbed 2.6 per cent to $10.32.

“With the collapse of the oil price, you could not have timed a better day for the Virgin listing,” said Atlas’ Cornet.

Stocks on the move

The energy sector, meanwhile, was heavily sold off in line with the plunge in the oil price back below $US69 a barrel for Brent.

Woodside Energy fell 6.5 per cent to $24.16, while Viva Energy came off 3.2 per cent to $2.09, Beach Energy dropped 2.9 per cent to $1.33, Ampol slid 2.1 per cent to $25.34, and Santos 1.5 per cent to $7.66.

Utilities considered a defensive sector also fell with the more bullish environment, with Origin falling 2.5 per cent to $10.72 and AGL 1 per cent to $9.87.

In corporate news, Rio Tinto, which on Tuesday pulled the trigger with Hancock Prospecting on a $US1.6 billion ($2.4 billion) iron ore project in Western Australia, rose 3 per cent to $104.94.

Collins Foods soared 17.4 per cent to $8.52 despite the owner of KFC fast food outlets in Australia reporting an 89 per cent slide in full-year net profit, as investors bet the bottom has been reached. Chief executive Xavier Simonet also said lower interest rates were starting to help consumer sentiment in Australia.

Greatland Gold jumped 7.9 per cent in the opening minutes of its debut on the ASX which had been two years in the making. The shares closed at $7.30, up 10.6 per cent on the IPO price, which was set at $6.60 on June 15.

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