The S&P/ASX 200 Index (ASX: XJO) has jumped more than 100 points on Monday after a breakthrough in the conflict between the United States and Iran.
At the time of writing, the benchmark index is up 1.34% to 8,922 points after climbing as high as 8,937.5 points earlier in the session.
That puts the ASX 200 at its highest level in around 2 months and within 3.1% of its February record high.
Investors are buying across most of the market, with around 150 stocks trading higher. Only 47 are lower, and 3 are unchanged.
The rally follows Friday's 1.98% gain, leaving the index more than 3% higher over the past week.
Image source: Getty Images
US-Iran peace deal drives the rally
The main catalyst is a peace agreement between the United States and Iran after nearly 4 months of fighting.
The deal was reached with Pakistan's help and is expected to extend the ceasefire and reopen the Strait of Hormuz to commercial shipping.
US President Donald Trump said the agreement would allow ships to move freely through the strait, while a formal signing is expected to take place in Switzerland later this week.
Some details still need to be settled, but investors have welcomed the prospect of lower geopolitical risk.
Wall Street also provided a positive lead on Friday, with the Dow Jones Industrial Average Index (DJX: .DJI) rising 0.7%, the S&P 500 Index (SP: .INX) gaining 0.5%, and the Nasdaq Composite Index (NASDAQ: .IXIC) adding 0.3%.
Miners and banks lead the gains
Mining shares are doing much of the heavy lifting after commodity prices moved higher outside the energy market.
BHP Group Ltd (ASX: BHP) shares are up 3.10% to $64.88, while Rio Tinto Ltd (ASX: RIO) shares have climbed 2.14% to $188.27.
Fortescue Ltd (ASX: FMG) shares are also 2.10% higher at $20.64.
The major banks are adding further support. National Australia Bank Ltd (ASX: NAB) shares are up 2.85% to $37.54, while Commonwealth Bank of Australia (ASX: CBA) shares have gained 1.71% to $162.24.
Westpac Banking Corp (ASX: WBC) shares are 1.03% higher at $35.36.
Energy shares miss out
The S&P/ASX 200 Energy Index (ASX: XEJ) is moving in the opposite direction as oil prices fall on hopes of a return to normal shipping through the Strait of Hormuz.
Brent crude is down more than 3.9% to around US$83.90 a barrel, while West Texas Intermediate (WTI) crude has fallen 4.7% to about US$80.90 a barrel.
The weaker oil price has pushed Woodside Energy Group Ltd (ASX: WDS) shares down 1.67% to $30.71, while Santos Ltd (ASX: STO) shares are sinking 5.08% to $7.66.
