Australian shares post eight-week closing high after US-Iran deal

Australian shares notched their highest close in eight weeks on Monday, as a preliminary US-Iran agreement to end hostilities and reopen the Strait of Hormuz boosted risk appetite.

The benchmark S&P/ASX 200 index ended 1.3% higher at 8,914.00, posting its highest close since April 21.

Equities across Asia rose after US and Iranian officials announced a preliminary agreement to end their war and reopen the Strait of Hormuz, easing fears of a prolonged disruption to global energy supplies.

“Markets have responded with cautious optimism to the US-Iran peace agreement… the immediate relief is clear — oil prices fell sharply, easing inflation concerns that have been a persistent headwind for global markets,” said Kai Chen, director at MPC Markets.

In Sydney, miners led gains.

The sub-index rose 4.2% in its best day in more than two months on the back of a rally in metals prices.

Sector giant BHP Group jumped as much as 4% to a record high, while Rio Tinto added 2.7%. Gold stocks surged 9.1% to post their biggest one-day gain since 2020, as bullion prices rose on easing fears of interest rates staying higher for longer.

Gold miner Evolution Mining jumped 10%. Financials rose 1%, with the “Big Four” banks gaining over 1% each. Investors were awaiting the Reserve Bank of Australia’s cash rate decision on Tuesday, with analysts in a Reuters poll expecting the central bank to stand pat.

“A hold with dovish guidance hinting at future cuts would support broader market sentiment and bank valuations,” said Chen.

Limiting the market’s gains, energy stocks fell 5.6% as oil prices slipped on easing supply fears.

Woodside Energy dropped 5.7% after the company said it was not aware of any proposal involving US major Exxon Mobil and was not engaged in discussions regarding a potential transaction.

Across the Tasman Sea, the New Zealand benchmark S&P/NZX 50 index fell 0.2% to 13,360.59.