Markets Overview
- ASX SPI 200 futures up 1.5% to 8,638.00
- S&P 500 up 2.9% to 6,524.91
- Dow Average up 2.4% to 46,291.52
- Aussie up 0.7% to 0.6900 per US$
- US 10-year yield fell 4.9bps to 4.2988%
- Australia 3-year bond yield fell 5.8 bps to 4.65%
- Australia 10-year bond yield fell 9.6 bps to 4.97%
- Gold spot up 3.8% to $4,683.54
- Brent futures up 4.9% to $118.35/bbl
Economic Events
- 09:00: (AU) March S&P Global Australia PMI Mfg, prior 50.1
- 11:30: (AU) Feb. Building Approvals MoM, est. 5.5%, prior -7.2%
- 11:30: (AU) Feb. Private Sector Houses MoM, prior 1.1%
Wall Street staged a dramatic comeback at the end of March, with stocks climbing as oil fell on hopes that the war that has jolted global markets and disrupted energy supplies may be nearing a conclusion.
Equities saw their biggest rally since May on speculation that both the US and Iran might be looking for a way out of the conflict. The S&P 500 gained 2.9% and the Nasdaq Composite added 3.8%. Airlines jumped while energy producers slipped. US crude closed near $101. Its retreat from multiyear highs extended an advance in Treasuries. The dollar dropped and gold rose.
Those moves came after Iran’s state news agency reported a phone call between European Union Council President Antonio Costa and President Masoud Pezeskhian, who said the Islamic Republic has “the necessary will to end this war,” but only with guarantees “to prevent the recurrence of aggression.”
The Wall Street Journal reported President Donald Trump and his aides assessed that a mission to reopen the Strait of Hormuz would push the war beyond his timeline of four to six weeks. He later told the New York Post the US is “not going to be there too much longer,” adding that the waterway would open “automatically” after the US leaves.
“Markets have taken it on the chin for over a month and expectations may have hit a low enough point that any glimmer of hope is now much more valuable,” said Michael Bailey at FBB Capital Partners.
The Tick Index, which measures the amount of equities on the New York Stock Exchange moving higher versus lower on a second-by-second basis, spiked to the highest on record at one point Tuesday.
“While Trump may be considering an end to hostilities, the key issue — the status of the Strait — remaining unresolved will be what’s more important from the market’s point of view,” said Fawad Razaqzada at Forex.com. “It’s difficult to see Iran stepping back without extracting concessions.”
The war, now in its fifth week, has caused extensive infrastructure damage and effectively closed the strait. That has choked off energy supplies, spurring a surge in oil prices while triggering concern about a simultaneous jump in inflation and slowdown in growth.
On the economic front, data showed consumer confidence unexpectedly rose in March on slightly more upbeat views of business and labor-market conditions. Job openings fell and hiring slowed in February, pointing to cooler labor demand before the war.
“There do appear to be some early signs of stabilization in both consumer confidence and job openings after a clear fourth-quarter downtrend,” said Bret Kenwell at eToro. “While that doesn’t yet signal a meaningful rebound, it may suggest the consumer and labor backdrop are no longer deteriorating at the same pace.”
Ultimately, both investors and consumers need to see notable de-escalation in the Middle East and some relief at the gas pump before confidence can rebound significantly, he added.
