Australian shares log best day in seven weeks on Gulf peace hopes

AUSTRALIAN shares booked their best session in seven weeks on Friday (May 29), as news of a potential deal to extend the US-Iran ceasefire and reopen the Strait of Hormuz sparked a rush into battered stocks.

The S&P/ASX 200 index rose 1.6 per cent to 8,731.70 in its largest single-day gain since April 8, as the market rebounded after Reuters reported that the US and Iran had reached an agreement to extend their ceasefire and lift restrictions on shipping through the Strait.

Crude prices fell more than 1 per cent over the news, although concerns persisted about energy-fed inflationary pressures and tightened monetary policy in the near term.

The stock index rose a meagre 0.8 per cent for May, bringing to a close a volatile month marked by conflicting reports of progress on a potential deal to extend the US-Iran ceasefire.

“The wobbles in the ceasefire that reinflamed geopolitical risks and sparked a pullback in the ASX200 are a thing of the past, with the market poised for a bounce as a US-Iran peace deal comes within reach,” said Kyle Rodda, a senior financial market analyst at Capital.com.

Easing geopolitical risks and falling probabilities for future Reserve Bank of Australia rate hikes after this week’s inflation report ought to provide some support for the market, Rodda said.

Financials rose 1.2 per cent for the day, but logged a 3.9 per cent loss for the month, weighed down by investor jitters over slowing mortgage credit growth after major tax changes were announced in the federal budget earlier in May.

Miners gained 3 per cent, helping the sub-index notch its best month since August last year on firm base metal prices. BHP and Rio Tinto rose 2.9 per cent and 1.2 per cent, respectively.

Energy was the sole sector to end the day in negative territory with a 0.1 per cent fall. It posted its worst month since September.

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European markets rise as investors await US-Iran ceasefire extension

S&P 500 and Nasdaq hit record closing highs as US and Iran agree to extend ceasefire

New Zealand’s S&P/NZX 50 index closed 0.3 per cent higher at 13,244.55. The benchmark rose 2.6 per cent for the month after two straight months of losses. REUTERS