Australian equities surrendered most of their early gains on Tuesday, as optimism around a potential de-escalation in Middle East tensions faded and investors reassessed persistent geopolitical risks.
The S&P/ASX 200 Index ended the session just 13.5 points, or 0.2% higher at 8,379.4, with four of the index’s 11 sectors finishing in positive territory.
Markets had initially rallied sharply at the open after United States President Donald Trump said he would postpone military strikes on Iranian energy infrastructure for five days following what he described as productive talks with Tehran aimed at ending hostilities.
However, the Iranian government denied that any discussions had taken place, dampening investor confidence and prompting a pullback from intraday highs.
Oil prices reflected the shifting sentiment. Brent crude initially plunged more than 10% to below US$100 per barrel on hopes of easing tensions, before rebounding over 4% as uncertainty resurfaced.
The Materials sector led gains on the local market, with BHP Group adding 3%, Rio Tinto up 2.2%, and Fortescue closing 3.4% higher.
Gold miners also advanced, with Northern Star Resources up 2.1%, Evolution Mining adding 3.4%, and Newmont Corporation posting gains of 3.9%.
Energy stocks delivered a mixed performance, with the sector finishing lower overall. Ampol and Beach Energy rose 1.2% and 1.9%, respectively, while Santos shed 2.6% and Woodside Energy eased 0.2%.
Financial stocks were also mixed. Commonwealth Bank dipped 1.8%, National Australia Bank shed 4.5%, and Westpac lost 1.6%, while ANZ ticked 0.5% higher after an upgrade from JPMorgan to “overweight”.
The prospect of easing tensions in the Middle East weighed on defence-related stocks, with DroneShield down 6.8% and Electro Optic Systems declining 6.7%.
In corporate news, Myer reported a 32.8% rise in first-half profit to A$40.3 million, supported by the integration of its apparel brands. However, its shares reversed an early rally of nearly 10% to close flat.
Orica fell 0.9% as it managed supply disruptions following an outage at an ammonia plant in Western Australia.
KMD Brands advanced 3.2% after rejecting a takeover proposal from U.S. surfwear group Stokehouse.
On the bond markets, yields moved higher, with the 10-year rate rising 0.3% to 5.051% and the 2-year yield climbing 0.8% to 4.734%.
