The Australian sharemarket rebounded on Wednesday, bolstered by signs that the US is looking for an off-ramp from the Iran war and a rally in the big four banks.
The S&P/ASX 200 closed up by 113.1 points – or 1.3 per cent – to end the day at 8793.60 in the largest daily gain since the 2.6 per cent relief rally on April 8 following US President Donald Trump’s initial ceasefire announcement with Iran.
Five of the 11 ASX sectors finished higher. That followed robust gains overnight in New York, led by a rally in technology stocks that pushed the Nasdaq to a fresh peak.
Sentiment was bolstered by Trump announcing that an American naval operation to guide ships through the Strait of Hormuz would be paused in a bid to get Iran to agree to a peace deal.
EToro market analyst Josh Gilbert said that Wednesday’s gains flowed from the bounce-back in the banks and positive investor sentiment around artificial intelligence, which scored a boost on Tuesday when semiconductor company AMD posted a quarterly result that beat market expectations.
While investors had learned to live with geopolitical tension as “the new normal”, he said, positive market sentiment could be tested if peace talks deteriorated. “If oil prices stay where they are, around that sort of $US110 mark for Brent, then that has massive consequences on inflation and the consumer.”
Brent crude was trading below $US108 a barrel after US Secretary of State Marco Rubio told reporters at a White House briefing that combat operations against Iran had ceased, and that the American military’s efforts had turned to protecting ships in the Strait of Hormuz.
On the ASX, the pullback in oil weighed on energy stocks, with Woodside Energy down 2.7 per cent, Santos dipping 0.3 per cent, and Ampol falling 1.2 per cent.
Financials, meanwhile, were the strongest sector, led by the big four banks as investors took stock of the Reserve Bank of Australia’s cash rate increase on Tuesday. Commonwealth Bank climbed 3 per cent, Westpac 3.5 per cent, ANZ 3.1 per cent, and National Australia Bank 2.8 per cent.
Investors also piled back into industrials, with plumbing parts giant Reece climbing 1.4 per cent. Transurban Group gained 1 per cent.
Stocks in focus
In company news, David Di Pilla-backed DigiCo soared 25 per cent after the data centre developer announced it had sold its Chicago site for $1 billion. The business is looking to offload its North American locations in favour of expanding its flagship Sydney data centre.
Di Pilla’s HMC Capital, which owns about a 20 per cent stake in DigiCo, surged 17 per cent on the news of the sale, which was announced alongside a major overhaul of the asset manager’s business.
Fellow listed fund manager Magellan Financial Group fell 8.9 per cent, adding to losses on Tuesday that followed its announcement that it was handing away its $5.3 billion global equities funds to Vinva Asset Management.
Regis Resources and Vault Minerals extended losses following Tuesday’s announcement that the pair would merge to create the third-largest gold miner on the ASX. They closed down 3.6 per cent and 4.1 per cent, respectively.
JB Hi-FI slumped 6.3 per cent after chief executive Nick Wells warned the technology retailer had seen significant supplier component-related cost increases and stock shortages, driven by the building of data centres.
Meanwhile, Atlas Arteria added 0.6 per cent after the toll road group’s board told shareholders to reject a $6.9 billion hostile takeover bid from IFM Investors.