US sharemarkets surged on Friday, with the S&P 500 and Nasdaq Composite closing at fresh record highs after Iran declared the Strait of Hormuz open following a ceasefire between Israel and Lebanon. The S&P 500 rose 1.2% to 7,126.06, while the Nasdaq Composite gained 1.52% to 24,468.48, extending its winning streak to 13 sessions, its longest since 1992. The Dow Jones Industrial Average jumped 868.71 points, or 1.79%, to 49,447.43, while the Russell 2000 also reached a record high.
The rally was driven by easing supply concerns after Iran indicated commercial shipping could resume through the Strait during the ceasefire period. Oil prices fell sharply in response, with West Texas Intermediate crude dropping nearly 12% and Brent crude falling 9%.
Donald Trump said progress towards a broader agreement was advancing, while maintaining that the US naval blockade of Iranian ports would remain in place until a formal deal is reached. Markets have rallied strongly on expectations that a resolution to the war may be near, with the S&P 500 rising 4.5% for the week, the Nasdaq up 6.8% and the Dow gaining 3.2%.
Sentiment shifted over the weekend as tensions escalated in the Strait of Hormuz, with Iran reversing its decision to reopen the waterway while the US naval blockade remains in place.
Reports of attacks on commercial vessels and a US naval response added to uncertainty, while signals on negotiations remain mixed, with talks uncertain.
Oil prices rebounded sharply, with West Texas Intermediate crude rising around 7% to near US$90 a barrel and Brent gaining a similar amount.
Australian Market Outlook
Australian shares are set for a volatile start to the week, with early gains from Wall Street offset by renewed geopolitical uncertainty.
S&P/ASX 200 futures initially pointed to a rise of around 0.9%, or 82 points, but those indications were set before Iran reversed its position on the Strait, leaving the near-term outlook unclear.
The local market ended last week slightly lower, snapping a three-week winning streak, though it remains close to record levels.
Higher oil prices may support energy stocks, including Woodside Energy, Santos and Beach Energy, while broader sentiment is likely to be driven by developments in the Middle East and their impact on global markets.
