Banks keep Australia shares at five-week high, US-Iran truce concerns linger

Australian shares edged higher on Thursday to finish at a five-week peak, led by financials, as caution persisted over a fragile US-Iran ceasefire and inflation risks from restricted energy flows through the Strait of Hormuz.

The S&P/ASX 200 benchmark index rose 0.2% to 8,973.20, closing at its highest since March 3.

Volumes were below the 30-day average, indicating subdued activity.

Wednesday’s rally cooled as fighting in the Middle East continued and there were few signs of safe passage through the strait, raising concerns over energy supply and pushing oil prices higher.

“The enthusiasm after yesterday’s ceasefire and Strait of Hormuz re-opening plan has certainly been tempered on news Israel has launched attacks on Lebanon and critical infrastructure on both sides of the Strait have been hit,” said Luke Winchester, portfolio manager at Merewether Capital.

“Investors are largely remaining on the sidelines until there is clear resolution of Middle East conflict.”

In Sydney, financials rose 1.2% to touch a near-seven-week high. All the “Big Four” banks rose between 1% and 2.2%.

The resources sub-index, which accounts for more than a third of the benchmark, snapped a two-session rally to slip 0.2%, dragged by weak commodity prices.

BHP ended flat, while Rio Tinto lost over 1%.

Technology stocks plunged 6.5% in their worst session since early February.

WiseTech Global and Xero shed 10.9% and 8.6%, respectively. Energy stocks rebounded 2.6% after tanking sharply the previous day, tracking oil prices higher.

Woodside Energy and Santos gained 4% and 2.5%, respectively. Elsewhere, discretionary stocks, gold miners , and healthcare firms slipped between 0.6% and 1.2%.

In New Zealand, the benchmark S&P/NZX 50 index ended in positive territory for the fourth straight day at 13,273.81, its highest since March 18.