Hopes of an end to the war in the Middle East are expected to help lift the Australian sharemarket to a sharply higher opening on Wednesday.
A gain of 1.5% at the outset is implied by trading on the Australian Securities Exchange (ASX), where the June contract of the ASX 200 share price index was last quoted 130 points over the prior settlement at 8,643 points.
The impetus for the positive start was speculation about a de-escalation of the conflict between the United States and Iran that lifted United States stocks to a higher close on Tuesday (Wednesday AEDT).
The three major U.S. indexes rallied on a report that President Donald Trump was willing to end the military campaign, and Defense Secretary Pete Hegseth said the next few days would be decisive, but the conflict would intensify if Iran did not make a deal.
The Dow Jones Industrial Average charged up 2.5%, the S&P 500 surged 2.9% and the Nasdaq Composite Index rocketed 3.8%.
"What you're seeing in capital markets today is speculation around an earlier off-ramp, or a cessation of hostilities," U.S. Bank Wealth Management senior investment director Bill Northey was quoted as saying in a Reuters article.
The ASX 200 had closed up 0.3% to 8,481.8 points on Tuesday after recovering from earlier falls on talk that the conflict may cease.
CommSec Equity Market Strategist James Gruber said gold stocks were expected to rise due to a “relief rally” by the precious metal, which had plummeted in March.
He noted the expected rise in the ASX 200 was less than the increase in Wall Street benchmarks because Australia faced additional challenges around inflation and rising interest rates.
“So that may put a cap on what happens in Australia compared to the U.S.,” Gruber said.
In the news today, Australian building approvals data for February will be issued, while companies trading ex-dividend include Harvey Norman (ASX: HVN) and ARB (ASX: ARB).
In fixed interest markets, the Australian Government bond yield curve flattened as two-year rates rose 0.17% to 4.627% and 10-year rates eased 0.18% to 4.954% at the time of writing.
