ASX jumps as optimism returns; CBA hits fresh record, oil stocks tumble

Welcome to your five-minute recap of the trading day.

The numbers

The Australian sharemarket had a strong session after US President Donald Trump announced a tentative ceasefire between Israel and Iran, raising hopes that the worst of the Middle East conflict has passed.

The S&P/ASX 200 rose 80.6 points, or 1 per cent, to 8555.50, with eight of the 11 sectors advancing, led by miners and banks. The gains come after Wall Street rallied overnight and the price of oil tumbled on hopes that Iran won’t disrupt the global flow of crude in retaliation for the US airstrikes on its nuclear facilities. Energy stocks tanked.

Virgin Australia shares took off on the first day of trading on the ASX.Credit: Edwina Pickles

Shares in the Commonwealth Bank jumped another 2 .1 per cent to a fresh all-time high. Virgin Australia jumped more than 11 per cent on its first day of trading back on the ASX. The Australian dollar traded 0.8 per cent higher at 65.1 US cents at 4.42pm AEST.

The lifters

Virgin Australia shares soared 11.4 per cent as the airline returned to the ASX after more than four years’ absence, luring investors with new management and a more streamlined business plan.

The nation’s second-largest airline finished its first trading day back on the sharemarket at $3.23, giving it a market value of $2.52 billion. Virgin has sold $685 million worth of stock to fund managers and retail investors in an initial public offering this month at $2.90 a share, floating about 30.2 per cent of the company. Shares of its larger rival Qantas rose 2.4 per cent.

CBA shares continued their rally, climbing another 2.1 per cent to $188.13, yet another all-time high. The stock – which is the biggest on the ASX, making up about 12 per cent of the entire local sharemarket – has benefited from the perception of Australia as a haven for international investors amid periods of volatility. It has now gained more than 22.5 per cent since the start of the year.

“The driving reason for this continued rally is that there are still offshore investors who want exposure to the Australian stock market,” said Tony Sycamore, a market analyst at IG Australia in Sydney. Investors looking to invest in the relative safety of the nation’s equities are heading towards the market’s biggest blue-chip stock, which is CBA, he said.

The nation’s other big-four banks also advanced. NAB climbed 2.2 per cent, Westpac gained 2.6 per cent and ANZ finished up 1.4 per cent.

As optimism returned to the ASX, investors also piled into sectors dependent on economic growth such as materials and tech stocks.

Iron ore heavyweights BHP, Fortescue Metals and Rio Tinto jumped 2.4 per cent, 4.8 per cent and 3.1 per cent, respectively. Rio announced a venture with Gina Rinehart’s Hancock Prospecting to tip in $US1.6 billion ($2.5 billion) to develop a new iron ore project in WA’s Pilbara region. Its iron ore chief, Simon Trott, described the project’s state and federal government approvals as a key milestone as it invested in the next generation of Pilbara iron ore mines.

Software maker WiseTech Global – the biggest tech stock on the ASX – was up 2.5 per cent, and data centre operator Next DC rose 3 per cent.

KFC operator Collins Foods soared 18.3 per cent after posting a 2.1 per cent rise in revenue from continuing operations to over $1.5 billion, even as underlying earnings slipped 5.7 per cent.

UBS analysts described the result as much better than expected, with Europe the biggest surprise.

The losers

Gold miners were mixed as demand for haven assets softened. While Evolution Mining added 0.8 per cent, Northern Star Resources and Newmont both shed 0.4.

Utilities – generally seen as defensive investments given their recurrent income streams – also declined as investors’ bravado returned, with power providers Origin Energy and AGL down 2.5 per cent and 1 per cent, and oil and gas pipeline giant APA down 1.7 per cent.

The biggest losers, however, were energy stocks, which took a big dive as oil prices tumbled. Oil and gas giants Woodside and Santos slumped 6.5 per cent and 1.5 per cent, while Australia’s biggest refiner, Ampol, lost 2.1 per cent.

West Texas Intermediate crude fell more than 5 per cent after Trump’s ceasefire comments on his Truth Social platform.

His statement followed Iran’s strikes on a US base in Qatar, which were seen as largely symbolic and unlikely to trigger broader economic fallout, pushing the S&P 500’s gain to 1 per cent overnight and sending oil below $US70, close to where it was before the fighting began.

The lowdown

Trump’s surprise statement on the Truth Social platform of the ceasefire follows a volatile period in which financial markets have been whipsawed for almost two weeks by concern the conflict would keep escalating.

“Following President Trump’s announcement of a provisional ceasefire, market uncertainty has temporarily eased,” said Tomo Kinoshita, global market strategist at Invesco Asset Management in Tokyo.

“Going forward, market transparency regarding future developments remains limited, and whether this provisional ceasefire will lead to a permanent one will be a key factor.”

“The ceasefire is now in effect. Please do not violate it!” Trump said in a second a post on Truth Social. The specific timing of the pause – and Israel’s response – remains unclear, and attacks were reported by both sides in the early hours of Tuesday. Iranian Foreign Minister Abbas Araghchi said in a post that his country would stop firing as long as Israel did.

Still, “the prospect of a prolonged conflict with US involvement has been repriced, giving the green light to add risk,” said Chris Weston, head of research at Pepperstone Group.

“As Trump himself has signalled, it’s time for markets to refocus on the key themes: economics, inflation, tariffs, and the passing of the ‘One Big, Beautiful Bill’.”

Supporting investor sentiment further was evidence overnight that the Federal Reserve might be pivoting towards an earlier-than-expected rate cut, said IG Market’s Tony Sycamore. The US central bank’s vice chair Michelle Bowman suggested the Fed could ease policy as soon as July if inflation remained well contained.

The Fed has been hesitant to cut interest rates this year because it’s waiting to see how much Trump’s tariffs will hurt the US economy and raise inflation.

The local gains came after a rally on Wall Street overnight in which the S&P 500 climbed 1 per cent after a period in which stock prices had jumped up and down on worries about the Middle East conflict. The Dow Jones added 0.9 per cent, and the Nasdaq composite also gained 0.9 per cent.

The perhaps most important boost to investor sentiment was that Iran’s retaliation did not seem to target the flow of oil. The fear throughout the Israel-Iran fighting has been that Tehran could squeeze the world’s supply of oil, which would pump up prices for oil, petrol and other products refined from crude.

Iran is a major producer of crude, and it could also try to block the Strait of Hormuz off its coast, through which 20 per cent of the world’s daily oil needs passes on ships.

“If the Strait of Hormuz was completely shut down, oil prices would rise to $US120 to $US130 a barrel,” said analyst Andy Lipow.

On Wall Street, Elon Musk’s Tesla was the single strongest force, jumping 8.2 per cent. The electric-vehicle company began a test run on Sunday of a small squad of self-driving cabs in Austin, Texas. It’s something that Musk has long been touting and integral to Tesla’s stock price being as high as it is.

With AP, Bloomberg

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