Australian shares extend gains as signs of Iran war de-escalation lift risk appetite

Australian shares edged higher on Tuesday as strong gains in banks outweighed losses in miners and energy stocks, while risk appetite remained buoyant for a second session on revived hopes for an end to the Iran war.

The S&P/ASX 200 index rose 0.3% to 9,050.40 by 1217 GMT, after rising 0.5% on Monday.

Comments from US President Donald Trump on Monday that talks with Iran were underway prompted an around 7% drop in oil prices overnight, pushed bond yields lower and lifted global equities, with the S&P 500 gaining 1.48% overnight.

However, the road to a near-term resolution still appeared rocky, given Iran has denied that any negotiations were being held or planned, instilling caution among investors.

In Sydney, financials led the charge, rising 0.9%, and were set to close at their highest level since mid-April if gains held.

The “big four” banks rose between 0.6% and 1.4%.

“Good results” from banks are widely expected by investors as mortgage growth has only just started to slow, analysts at Morgan Stanley said.

Miners fell 0.6%, with the biggest drag coming from BHP , down 1.7%.

The miner was set to hold talks with unions at its Port Hedland iron ore operations over a four-year wage deal, which, if reached, could avert a two-day strike set for the weekend.

Energy stocks extended losses, down 0.4%, tracking a fall in oil prices, with major oil and gas producers Santos and Woodside Energy falling around 2% each.

Fuel retailer Ampol broke its three-day winning streak since Thursday, when it had reported a three-fold increase in quarterly refining margins, dropping over 2% on the day.

The local technology sector got a boost from a strong overnight performance by US tech stocks, rising 2.6% to hit its highest level since July 10.

Real estate stocks rose 0.7%, with Charter Hall Social Infrastructure REIT jumping as much as 5.5% after it reported 12.6% growth in annual operating earnings.

Healthcare stocks added 0.9%.

New Zealand’s benchmark S&P/NZX 50 index rose 0.1% to 13,791.74 points.