The S&P/ASX 200 Index (ASX: XJO) is racing ahead today.
In morning trade on Thursday, the benchmark Aussie index is up 1.7% at 8,639.8 points. That will come as welcome news to investors after the index dropped 1.3% yesterday to plumb a new seven-week closing low.
So, who do investors have to thank for today's rebound?
Image source: Getty Images
ASX 200 lifts on Middle East peace hopes
Well, like it or not, today's strong performance on the ASX 200 comes largely thanks to United States President Donald Trump.
Yesterday (overnight Aussie time), Trump lifted investor sentiment when he said that the conflict with Iran is in its "final stages".
That's important because, as you're likely aware, the outbreak of the Middle East conflict at the end of February has sent global energy prices surging. That in turn has stoked inflation and pressured central banks, like our own RBA, to increase interest rates.
The Brent crude oil price fell around 5% on the news to US$105 per barrel. Gold, which tends to perform better in lower interest rate environments, gained 1.5% to US$4,545 per ounce.
In US stock markets, the S&P 500 Index (SP: .INX) closed up 1.1% on renewed hopes of a peace deal. The tech-heavy (and more interest rate sensitive) Nasdaq Composite Index (NASDAQ: .IXIC) closed up 1.5%.
Sounding a note of caution to US and ASX 200 investors about potentially premature euphoria over a lasting peace deal with Iran, strategist Louis Navellier said (quoted by Bloomberg):
Everyone wants to see this end, but negotiations so far have been far apart on key issues, with both sides expecting each other to blink first. Even if a deal is struck, it may take some time to be sure it won't be violated for things to fully return to normal.
Now, here's how some of the biggest names on the ASX are performing on hopes that the end of the war may be near.
What's happening with the likes of CBA, BHP, Newmont, and Woodside shares?
Starting with today's underperformers, the S&P/ASX 200 Energy Index (ASX: XEJ) is down 1.6% following the overnight slide in the oil price.
Santos Ltd (ASX: STO) shares are down 1.3% at $7.99, and Woodside Energy Group Ltd (ASX: WDS) shares are down 2.3% at $31.74 each.
The gold miners, on the other hand, are enjoying the brighter outlook for the yellow metal, with the S&P/ASX All Ordinaries Gold Index (ASX: XGD) up 2.1% at the time of writing.
Newmont Corp (ASX: NEM) shares are up 2.1% at $149.63, and Evolution Mining Ltd (ASX: EVN) shares are up 3.7% at $11.79.
Many ASX tech stocks are also enjoying the prospect of potentially easing inflation, with the S&P/ASX All Technology Index (ASX: XTX) – which also contains some smaller tech companies outside of ASX 200 tech stocks – up 0.8%.
Shares in data centre operator NextDC Ltd (ASX: NXT) are up 3.1%, trading for $14.66 each, while shares in location sharing software developer Life360 Inc (ASX: 360) are up 3.3%, trading for $18.49 apiece.
Turning to the ASX 200 banks, Commonwealth Bank of Australia (ASX: CBA) shares are up 0.6% at $163.56, while Westpac Banking Corp (ASX: WBC) has gained 1.6% at $36.09 each.
And finally, the S&P/ASX 200 Resource Index (ASX: XJR) is also leaping higher today, up 1.8%.
BHP Group Ltd (ASX: BHP) shares are up 2.7% at the time of writing at $58.90, while Fortescue Ltd (ASX: FMG) shares are up 1% at $21.83 each.
