Australia shares extend gains on Middle East peace hopes

Australian shares extended their gains into a second straight session on Friday, with most sectors trading in positive territory, as hopes for progress in a potential US-Iran peace deal improved investor optimism.

The S&P/ASX 200 index rose 0.5% to 8,666.10 as of 0028 GMT. The benchmark advanced 1.5% on Thursday.

It is on track to eke out a 0.2% weekly gain, capping a week marked by developments in the Middle East and the domestic economy.

Investors hinged their hopes on a possible ceasefire between the US and Iran.

US Secretary of State Marco Rubio said there had been “some good signs” in talks with Iran, although Tehran’s uranium stockpile and control over the Strait of Hormuz remained sticking points and added to uncertainty.

Back in Sydney, minutes of the Reserve Bank of Australia’s latest board meeting signalled a wait-and-watch policy approach after three rate hikes so far this year, giving room to observe the impacts of the Iran war on inflation and growth.

Thursday’s monthly jobs report showed unemployment rising to the highest level since late 2021, indicative of a possible loosening of the labour market to edge off a near-term rate hike.

Swaps now show an 11.7% chance of a hike at the RBA’s next meeting in June. Financials rose 0.2%, with the “Big Four” banks trading up between 0.4% and 0.9%.

The resources sub-index extended gains on the day, with BHP and Rio Tinto rising 1.8% each.

Gold miners were up 1.5%, with index leaders Northern Star Resources and Evolution Mining advancing 0.3% and 3.1%, respectively.

Energy stocks fell 0.3%. Sector majors Woodside Energy and Santos declined 1.1% and 0.3%, respectively.

In New Zealand, the benchmark S&P/NZX 50 index slightly rose 0.1% to 12,894.21, but on course for a 0.4% weekly fall.

Investor attention will be on the island country’s central bank meeting scheduled for next week.