Wall Street has hit fresh record highs on the back of a ceasefire-driven oil price collapse and a strong start to earnings season. But with energy inflation still running well above pre-war levels and the RBA still tightening, Australian investors should resist the temptation to read too much into the headlines.
Global Markets
US equities extended their recovery through the week, with the S&P 500 hitting its third consecutive record high and the Nasdaq posting its longest winning streak since 1992. From its recent low on March 30, the benchmark S&P 500 has now surged more than 12%, fully recovering its losses from the outbreak of conflict with Iran and building further.
The catalyst arrived on Friday. Iran’s foreign minister declared the Strait of Hormuz completely open for commercial vessels for the remaining period of the ceasefire, triggering a sharp reversal in energy markets. US crude plunged 11.4% to $83.85 per barrel, its lowest level since March 10, and equity markets responded immediately. The S&P 500 leaped 1.2% to close above 7,100 for the first time ever, the Dow surged 868 points, and the Nasdaq jumped 1.5%, capping a weekly gain of more than 4.5% for the S&P 500.
Earnings season added further fuel to the rally. Of the roughly 10% of S&P 500 companies that have reported so far, 88% have delivered positive earnings per share surprises. Renewed confidence in AI demand and the ongoing data centre buildout also helped drive the Nasdaq to its first record close since late October.
Australian Markets and ASX 200
The ASX 200 closed Friday at 8,947, leaving the index up approximately 2.5% year-to-date. That figure masks the sharp intra-year swings driven by geopolitical events. The index remains below its all-time high of 9,202 reached in February, and energy stocks gave back some of their war-driven gains as oil prices retreated through the week.
The domestic consumer picture continues to deteriorate. The Westpac Melbourne Institute consumer sentiment measure plunged 12.5% in April to 80.1, its steepest monthly drop since the COVID-19 pandemic, as households absorbed elevated fuel costs and lingering geopolitical uncertainty.
On the monetary policy front, markets are still pricing around a 60% probability of another RBA rate hike in May. Even with oil pulling back below $100 per barrel, Brent crude remains approximately 25% above pre-war levels. That means energy-driven inflation is far from resolved, keeping the RBA in a difficult position as it weighs a slowing consumer against a stubbornly elevated price environment.
A Message From Our Founder
The weekend brought mixed signals on the Strait of Hormuz. Some reports suggest commercial traffic is flowing again and others cast doubt on just how open it actually is. Until tankers are transiting freely, insurance markets are comfortable, and volumes return to something resembling normal, the energy crisis is not over. It is on pause.
What is striking is that equity markets, particularly in the US, have taken the ceasefire news and run with it all the way to new all-time highs. That creates an interesting moment for investors. For anyone holding positions they are not comfortable with heading into what remains a contractionary domestic environment, this is a second chance to reassess. The first opportunity came before the conflict broke out. This one is gift-wrapped by a relief rally.
Locally, the picture has not fundamentally changed. The RBA is still tightening, household budgets are still under pressure, and the structural inflation problem predates the war and will outlast it. We remain focused on income-generating assets tied to the cash rate, where the tailwind from higher rates is doing exactly what it should. The all-time highs are a headline, not a signal to change course.
For ongoing market insights and portfolio commentary, visit the Barker Wealth market updates page.
Disclaimer: This commentary is intended for general information only and does not constitute personal financial advice. You should consider your own objectives, financial situation and needs before making any investment decisions. Barker Financial Pty Ltd ABN 62 675 838 605, trading as Barker Wealth, is a Corporate Authorised Representative (CAR) 1317193 of AFSL Holdings Australia Pty Ltd ABN 75 165 392 889, AFSL 460940.