Australian equities advanced on Monday, with financials, health names and gold miners at the forefront of gains as comments from U.S. President Donald Trump lifted sentiment on prospects for reopening the Strait of Hormuz.
The S&P/ASX 200 increased 0.5% to 9,019.30 points, extending momentum from July, which marked the index’s strongest monthly rise in five months.
Over the weekend, President Trump said that Iran and other Middle Eastern nations had sought time to finalise a deal for the "immediate, complete and total" reopening of the strategic waterway. Market participants treated the remarks as a constructive development but not yet decisive.
Market caution remains
Tim Waterer, chief market analyst at KCM Trade, described the reaction as tentative: "The market is treating the latest Middle East developments as a potential positive, but not yet a game-changer. Until there’s clearer evidence that any ceasefire can hold, risk appetite is likely to remain measured and selective."
Sector performance
- Financials led the gains among major sectors, rising 0.4%. Three of the country’s "Big Four" banks climbed between 0.2% and 0.8%.
- The healthcare subindex and consumer staples each rose by about 1%, with 4DMedical leading the healthcare advance and Treasury Wine Estates the consumer staples pack.
- Gold miners gained 0.7% as bullion prices strengthened, with XAU/USD recorded up 0.49% in line with higher spot gold.
Energy stocks were the notable laggards, dropping 1.2% and posting their weakest session in a week as oil prices fell. Major oil producers Woodside Energy and Santos lost 1.4% and 1.9% respectively.
Interest rate backdrop
Markets are pricing in almost no chance that the Reserve Bank of Australia will raise its cash rate from the current 4.35% at next week’s meeting, and there is little expectation of a rate move in September.
With geopolitical headlines moderating risk appetite only partially, analysts noted that the operating environment for major banks remains challenging. That keeps investor focus on upcoming corporate earnings in August for clearer signals about the health of Australian businesses.
Regional markets
New Zealand’s benchmark S&P/NZX 50 index rose 0.6% to 13,774.93 points, reflecting broader regional support for equities.
Investors will look to the August earnings season for fresher insight into corporate performance and how it may influence market direction amid ongoing geopolitical and commodity price developments.