The Australian share market has rocketed to an eight-week high and oil prices are plunging on news that the US and Iran have reached a peace deal.
The S&P/ASX200 gained 122.2 points by midday on Monday, to be up 1.39 per cent, to 8,926.2, as the broader All Ordinaries jumped 128.3 points, or 1.42 per cent, to 9,134.4.
Markets had been waiting for a breakthrough on the Middle East conflict for months, with easing energy costs expected to provide a tailwind for equities and risk sentiment, eToro APAC lead analyst Josh Gilbert said.
“That said, investors should tread carefully before getting too far ahead of themselves, because there is always a temptation in moments like this to chase the move,” he added.
“The deal isn’t actually signed until June 19th, the details are still thin, and this conflict has shown more than once that headlines can turn on a dime.”
Miners led the bourse higher, as the materials sector gained 3.9 per cent, with gold miners rebounding sharply.
The precious metal itself firmed to nearly $US4,315 ($A6,100) an ounce, bolstering the All Ordinaries gold sub-index by more than eight per cent.
Mega miners BHP and Rio Tinto rallied roughly three per cent each, despite fairly steady copper and iron ore futures.
Oil was the commodity fuelling market volatility, however, as Brent crude fell to $US83.69 a barrel, its lowest price since March 10 and in the second week of the conflict.
If the Hormuz Strait remains open and oil and refined fuel exports resume quickly, Brent could fall to $US80 a barrel by the end of 2026, CommBank commodities and sustainability research head Vivek Dhar said.
“Crude oil flows should be able to resume quickly and have a good chance of reaching pre‑war levels in three to four months,” he said.
Refineries in the Gulf have been less lucky and are looking at between six months and a year to normalise, Mr Dhar said.
As oil prices fell, local refinery operators Viva Energy and Ampol tumbled 7.6 per cent and 4.9 per cent respectively by midday AEST.
Woodside also lost 3.5 per cent as it played down speculation it is in talks with Exxon for a potential takeover by the US energy giant.
The uplift in risk sentiment helped boost the heavyweight financials sector, which rose 1.2 per cent as all the big four banks traded higher.
In company news, Chemist Warehouse owner Sigma Healthcare has tossed plans to buy UK beauty and pharmacy chain Boots, prompting a seven per cent uplift in its share price.
Bourse operator ASX Ltd gained almost two per cent after settling a case with the corporate watchdog and admitting that 2022 claims about the progress of its since-scrapped CHESS replacement project were misleading.
Shares in footwear company Accent surged by almost a tenth following a takeover bid from UK company Frasers Group.
The Australian dollar was buying 70.74 US cents, up from 70.33 US cents on Friday at 5pm.
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