S&P/ASX 200 Index (ASX: XJO) shares rose 1.16% to an intraday high of 8,604.2 points on Tuesday.
The bump came on renewed hopes of a US-Iran deal to end the war and reopen the Strait of Hormuz.
This morning, US President Donald Trump said he had called off a planned military strike on Iran for tomorrow.
The President said he did so after assurances from Persian Gulf leaders that an acceptable deal was not far off.
On Truth Social, President Trump said:
I have been asked by the Emir of Qatar, Tamim bin Hamad Al Thani, the Crown Prince of Saudi Arabia, Mohammed bin Salman Al Saud, and the President of the United Arab Emirates, Mohamed bin Zayed Al Nahyan, to hold off on our planned Military attack of the Islamic Republic of Iran, which was scheduled for tomorrow, in that serious negotiations are now taking place, and that, in their opinion, as Great Leaders and Allies, a Deal will be made, which will be very acceptable to the United States of America, as well as all Countries in the Middle East, and beyond.
However, Trump also warned that he had instructed the military to remain prepared for "a full, large scale assault of Iran, on a moment's notice, in the event that an acceptable Deal is not reached".
The world has been trapped in a prolonged oil shock since the war began on 28 February.
The Strait of Hormuz, a key shipping channel for Middle East energy exports, remains effectively shut down.
About 20% of the world's oil and gas supply is shipped through the Strait of Hormuz.
Iran is now allowing ships from China through the strait, while hundreds of other tankers sit and wait.
The oil shock has caused energy prices to surge, contributing to resurgent inflation in many nations, including Australia.
On Tuesday, the Brent Crude oil price is US$109.20 per barrel, down 2.4%, reflecting hopes of a peace deal soon.
WTI Crude is US$102.30 per barrel, down 2%.
Australia was already facing an uptick in inflation before the war began, and the oil shock has exacerbated it.
Assistant Reserve Bank Governor, Sarah Hunter, said in a speech today:
The Middle East conflict is a clear external shock. While the duration of the conflict is uncertain, economists generally agree that the disruption in global oil and natural gas markets will lead to higher inflation here and overseas, working through several channels.
… our May forecasts see headline inflation peaking at 4.8 per cent in the June quarter, significantly higher than was expected in our February forecasts.
Image source: Getty Images
Which ASX 200 shares are leading the market today?
The biggest mover on the ASX 200 today is telco share Tuas Ltd (ASX: TUA), up 18.3% to $2.69.
Investors appear to be buying the dip after Tuas shares were smashed to the tune of 62% yesterday.
The stock's dive came on news that the company had allegedly been using spectrum that it didn't own.
Among the 11 market sectors on Tuesday, consumer staples is in the lead, up 3.5%.
This is largely due to a 4.8% surge in the Woolworths Group Ltd (ASX: WOW) share price to $34.57.
The Coles Group Ltd (ASX: COL) share price is also bouncing, up 3.1% to $21.49 at the time of writing.
The Elders Ltd (ASX: ELD) share price is also up 3.1% to $5.72 today.
Endeavour Group Ltd (ASX: EDV) shares are up 2.8% to $3.11.
Technology is the sector laggard, down 0.5%, after the Nasdaq Composite Index (NASDAQ: .IXIC) fell overnight.
TechnologyOne Ltd (ASX: TNE) shares are down 2.7% to $27.84 despite a record first-half profit for 1H FY26.
The NextDC Ltd (ASX: NXT) share price is down 2.2% to $14.26, and Elsight Ltd (ASX: ELS) is down 4.4% to $5.64.
