Australia shares close at two‑month high on Middle East optimism

Australian shares hit two-month high as miners and banks rally on Middle East détente

The S&P/ASX 200 index closed 0.5% higher at 8,966.30 points on Wednesday, marking a fourth straight session of gains and its strongest finish since April 15. The market rebound was led by miners and banks after details of an interim U.S.-Iran agreement lifted investor sentiment by easing fears about disruption to oil shipments through the Strait of Hormuz.

"The recent rally still has life, supported by easing geopolitical risk, lower oil prices and renewed momentum in risk appetite," said Hebe Chen, market analyst at Vantage Markets. "Reopening of the Strait of Hormuz should keep the near-term tone positive."

Miners were among the top performers, rising 1.2% as copper prices inched higher. Index heavyweight BHP Group surged as much as 1.2% during the session, touching a record high. The mining sector's strength reflected a broader rotation back into commodities after a period of risk-off positioning prompted by geopolitical tensions.

Banks also contributed to the market's advance, climbing 0.5% and registering their fourth consecutive session of gains. Commonwealth Bank of Australia (CBA) and Macquarie Group each gained more than 1% on the day, with Macquarie also reaching a record high, underscoring improving investor appetite for financial stocks as near-term oil-price relief tempered inflation concerns.

• Benchmark close: S&P/ASX 200 (AXJO) 8,966.30, up 0.5%
• Miners: +1.2%; BHP Group up to 1.2%, record high
• Banks: +0.5%; CBA and Macquarie Group both >1%, Macquarie at a record high
• Gold stocks: +3.5%; Northern Star Resources +2.6%
• Energy: -2.3% as oil prices eased
• Tech sector: +2%

Gold stocks outperformed on the session, rising 3.5% as bullion held steady, with Northern Star Resources jumping 2.6%. Energy names underperformed, falling 2.3% following a modest dip in oil prices that accompanied reports of the interim agreement. Technology stocks traded in the green, advancing about 2% overall.

Market commentary linked the day's moves to the outlines of an interim U.S.-Iran deal under which Washington would ease its blockade of Iranian ports while Tehran would restore passage of oil tankers and other vessels through the Strait of Hormuz—an outcome that traders expect to lower the premium on oil and ease inflation pressures.

Investors were also watching for monetary policy signals beyond the region, with the first Federal Reserve policy decision under Chair Kevin Warsh due later in the day. Analysts noted that any indication of policy direction from the Fed could influence risk appetite in Canberra, particularly for rate-sensitive sectors like banks and commodities.

Looking ahead, strategists say near-term market tone should remain constructive so long as geopolitical risk continues to ease and oil prices remain contained. "Confidence in commodities and banks is improving as investors look past the RBA's hawkish pause and focus on the potential inflation relief from lower oil prices," added Hebe Chen, summarising the current drivers behind the rally.