A tentative US-Iran ceasefire extension calmed markets overnight, sending US equities to fresh records and putting the ASX on course to recover yesterday’s losses.
Markets stabilise on ceasefire hopes
Global markets improved overnight after reports emerged that US and Iranian negotiators had tentatively agreed to extend their ceasefire for 60 days, easing fears of a broader Middle East conflict that has weighed on investor sentiment in recent weeks.
The S&P/ASX 200 is expected to regain some of yesterday’s losses, with futures pointing to a 0.6% lift at the open. While US President Trump is yet to formally approve the proposal, investors responded positively to the prospect of reduced disruption to oil supply routes through the Strait of Hormuz and the resumption of nuclear negotiations.
Wall Street hits fresh records
US equities edged higher to fresh records overnight. Bond yields fell and the US dollar weakened, creating a more favourable backdrop for risk assets globally. The Australian dollar rebounded strongly, supported by improved risk sentiment and firmer commodity prices, particularly copper.
Softer US data keeps rate cut hopes alive
On the economic data front, US first quarter GDP was revised down to 1.6%, a softer reading than many had anticipated. Inflation data also came in slightly below expectations. Market pricing has shifted to reflect a higher probability of US Federal Reserve rate cuts later this year, though the timing and extent of any cuts remain uncertain.
Moderating growth combined with easing inflationary pressure has historically influenced the Fed’s policy deliberations, though past conditions are not necessarily indicative of future outcomes.
What to watch locally
For Australian investors, attention now turns to upcoming Australian private credit data, which will provide a read on domestic lending conditions. Offshore, inflation releases across Europe and Japan will be closely monitored for further direction on the global rate outlook.
Market participants will be watching whether US President Trump formally signs off on the ceasefire extension, along with any further commentary from the Federal Reserve. This information is general in nature and does not constitute financial advice. Please speak with a qualified financial adviser before making any investment decisions.
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Joshua Barker joined ausbiz to discuss the ASX open and what global markets are signalling for Australian investors.
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This article is intended for general informational purposes only and does not constitute financial product advice, legal advice, or tax advice. The information provided is based on general principles under the Corporations Act 2001 (Cth) and may not apply to your individual circumstances. Always consult a licensed financial adviser and a qualified accountant before making investment decisions. Past performance is not a reliable indicator of future performance.