The S&P/ASX 200 jumped 170.8 points, or 2 per cent, to 8804 on Friday, its biggest one-day gain since April 8, as investors piled into stocks on hopes that a peace deal with Iran could be signed as soon as this weekend.
The benchmark's surge pushed Australian shares to a five-week high and left it up 2.1 per cent for the week. Materials led the advance, with Newmont up 4 per cent to $137.79, Pantoro Gold lifting 9.6 per cent to $2.52 and BHP climbing 3.5 per cent to $62.93. Banks also recovered strongly after a bruising week, with Commonwealth Bank up 2 per cent to $159.51, National Australia Bank adding 2.3 per cent to $36.50, Westpac rising 1.5 per cent to $35 and ANZ gaining 1 per cent to $34.17.
The move came as Brent crude fell 2 per cent to a two-month low of US$88.60 after Trump pulled back from threatened military strikes against Iran, while gold steadied after an overnight surge to US$4200 an ounce. Justin Lin said the price action suggested investors were becoming increasingly comfortable with the idea that the worst of the oil shock may be behind us, and that mood showed up in energy stocks: Karoon Energy slipped 1 per cent to $2.03 and Woodside Energy fell 0.9 per cent to $31.23 even as the broader market rallied.
Not every gain was tied to the Middle East. Magellan Financial rose 5.2 per cent to $9.52 after the competition regulator said its merger with Barrenjoey could take effect in early July, while the company said it would rebrand as Barrenjoey Group. Monash IVF climbed 2.2 per cent to 68.5¢ even after cutting full-year guidance and saying it now expects underlying net profit between $17 million and $18 million. ANZ also said its New Zealand chief executive, Antonia Watson, would retire in September, giving investors one more corporate change to digest in a week already shaped by geopolitical relief.
For now, the market is looking past the conflict risk and toward Tuesday, when traders expect the Reserve Bank of Australia to hold the official cash rate steady. That test will decide whether Friday's rally was a one-day repricing of fear or the start of something more durable.
