Australian shares are expected to reverse five days of losses when trading resumes on Tuesday, buoyed by hopes that the Middle East conflict will be more limited than initially feared and expectations of interest rate cuts in the United States.
A stronger opening and the plunge in crude oil prices are good news for investors in Virgin Australia Holdings (ASX: VGN), which returned to the Australian Securities Exchange (ASX) today following an initial public offer at $2.90 per share which raised A$685 million (US$442 million).
Prices of ASX-listed companies listed are set to follow the pattern of those in New York where the major stock indices are closely sharply higher on Monday (Tuesday AEST).
Futures trading on the ASX points to the main price barometer started 0.7% higher than the previous close with the S&P/ASX 200 share price index September contract last trading 62 points above the previous settlement at 8,520 points, at the time of writing.
Wall Street stocks rose strongly on Monday as the prospects of the U.S. Federal Reserve cutting interest rates in July countered concerns about the conflict between the United States, Iran and Israel.
The Dow Jones Industrial Average and Nasdaq Composite rose 0.9% while the S&P 500 jumped 1%.
The market was optimistic after learning Qatar had successfully intercepted Iranian missile attacks with no casualties and President Donald Trump indicated no interest in escalating from here.
The Brent crude price fell US$5.53 or 7.2% to US$71.48 a barrel, the biggest drop since August 2022.
InfraCap CEO and portfolio manager Jay Hatfield said the rally was surprising.
"The market action is extremely bullish because this is the time frame in June when we're supposed to have a pullback," Hatfield was quoted by Reuters as saying.
"People do not want to sell [on] this market."
The Australian share market had closed 0.4% lower at 8,474.9 points on Monday, its fifth straight session of falling prices, after U.S. bombing of Iranian nuclear sites sparked worries about the scale of retaliation from Tehran.
Apart from the Virgin listing at 12:00 pm AEST (2:00 am GMT), corporate news includes the 2025 financial year results from Collins Foods (ASX: CKF).
In the fixed interest markets, Australian bond yields rose 0.22% to 4.183% at the 10-year end of the curve and 0.09% to 3.261% for two-year paper.
