Australia's sharemarket has staged a powerful recovery as investors responded to fresh signals from US President Donald Trump suggesting the Iran conflict could soon conclude. The S&P/ASX 200 Index climbed 1.1 per cent, or 96.50 points, to reach 8695.50 by 2.05pm on Tuesday. This significant rebound corrected a substantial portion of Monday's dramatic $90 billion wipeout, which had been triggered by escalating Middle East turmoil and mounting fears over the global economic implications of a prolonged conflict.
Trump's Optimistic Comments Fuel Market Relief
President Trump injected a jolt of optimism into rattled financial markets after revealing that the United States was 'very far' ahead of its original four-to-five-week military timeline in Iran. Traders immediately interpreted these comments as a potential turning point in the crisis. Trump then went further, hinting the conflict was 'close to ending,' sending a wave of relief across global trading floors.
'We're achieving major strides toward completing our military objective,' Trump declared at a Monday press conference. 'We could call it a tremendous success right now… Or we could go further, and we're going to go further.' The president also attempted to calm one of the market's biggest pressure points by stating, 'We're looking to keep the oil prices down.'
Wall Street's Dramatic Reversal
Wall Street reacted instantly to Trump's remarks. US markets, which had plunged early in the session as oil prices soared and fears of a wider regional conflict intensified, staged a stunning late-day comeback once Trump's comments broke. The S&P 500 jumped 0.83 per cent, the Nasdaq leapt 1.38 per cent, and the Dow Jones added 0.51 per cent by the closing bell.
Oil Prices Remain Volatile Amid Ongoing Tensions
Oil remained the primary source of global jitters throughout the trading day. Crude briefly rocketed to USD$120 a barrel, its highest level since mid-2022, as shipping lanes remained disrupted and the Iran conflict entered its tenth day. Prices later eased back below USD$90, but analysts warn the risk of another inflation shock is growing, especially as households worldwide continue battling rising costs.
Iran Rejects Trump's Assessment
Iran hit back swiftly against Trump's upbeat assessment. The Islamic Revolutionary Guard Corps rejected the US president's comments, insisting Washington had no power to dictate the outcome of the war. 'We are the ones that will determine the end of the war,' an IRGC spokesperson told state media, dismissing Trump's remarks as 'nonsense.'
Posting on Truth Social on Tuesday, Trump warned that Iran would face severe consequences if they blocked oil supplies. 'If Iran does anything that stops the flow of Oil within the Strait of Hormuz, they will be hit by the United States of America TWENTY TIMES HARDER than they have been hit thus far,' he said. 'Additionally, we will take out easily destroyable targets that will make it virtually impossible for Iran to ever be built back, as a Nation, again — Death, Fire, and Fury will reign upon them — But I hope, and pray, that it does not happen!'
Market Outlook Remains Uncertain
Early US futures point to a weaker session ahead, signalling Wall Street may struggle to hold onto its overnight gains. The conflicting statements from US and Iranian officials continue to create uncertainty, with traders closely monitoring developments in the Middle East and their potential impact on global energy markets and economic stability.
