US sharemarkets rallied on Thursday after President Donald Trump said planned military strikes against Iran had been cancelled and indicated a formal agreement between the two countries was close.
The S&P 500 rose 1.75% to close at 7,394.30, while the Nasdaq Composite gained 2.54% to 25,809.66. The Dow Jones Industrial Average jumped 929.97 points, or 1.86%, to finish at 50,848.75.
Investor sentiment improved significantly after Trump announced that scheduled strikes and bombings against Iran had been called off and that negotiations were nearing completion.
Speaking from the Oval Office, Trump said the United States had secured an agreement that Iran would never possess a nuclear weapon and suggested a signing ceremony could take place soon. The prospect of a deal helped ease concerns that the Iran war would escalate further and disrupt global energy markets.
Technology and semiconductor stocks led the rebound after suffering heavy losses earlier in the week. The iShares Semiconductor ETF surged more than 8%, with Micron Technology, Advanced Micro Devices and Intel all posting strong gains. Intel rose 9% after receiving an upgrade from Bank of America.
The Philadelphia Semiconductor Index rallied 7.9%, while Arm Holdings and Marvell Technology each gained more than 11%.
Nvidia added 2.2% and Tesla rose 4.6%, although Oracle fell 8% after announcing plans to raise an additional US$20 billion through equity and debt markets to fund artificial intelligence investments.
Investor enthusiasm also continued building ahead of SpaceX’s market debut, which is expected to become the largest IPO in history. Reports suggest the offering has attracted more than US$100 billion in orders from retail investors.
Economic data was mixed. US producer prices rose 1.1% in May, exceeding expectations for a 0.7% increase. However, core producer inflation, which excludes food and energy, came in below forecasts at 0.4%.
Oil prices fell sharply as investors responded to signs that a diplomatic resolution to the Iran war may be approaching. US West Texas Intermediate crude dropped 2.58% to settle at US$87.71 a barrel, while Brent crude fell 2.92% to US$90.38. Both benchmarks extended losses after Trump confirmed planned military action had been cancelled. The decline in oil prices helped ease inflation concerns and supported a broad recovery across equity markets.
US Treasury yields also moved lower, with the 10-year yield falling 9 basis points to 4.46%, reflecting reduced geopolitical risk and expectations that lower energy prices could ease pressure on inflation.
Gold rose above US$4,200 an ounce as investors continued balancing optimism over negotiations with lingering geopolitical uncertainty.
Australian Market Outlook
Australian shares are expected to open sharply higher after Wall Street staged a strong rebound and oil prices retreated on hopes of a formal agreement between the United States and Iran. S&P/ASX 200 futures are up 146 points, or 1.7%, to 8,794.
Technology stocks are likely to lead gains locally following the strong recovery across US semiconductor companies, while lower oil prices may support broader market sentiment.
Investors will also be watching developments around the proposed Iran agreement, with Trump indicating a signing ceremony could take place in Europe this weekend and that the Strait of Hormuz would reopen afterwards.
SpaceX’s trading debut will remain a major focus for global markets. The company has priced its shares at US$135 and is expected to begin trading on Friday in the United States, with the offering widely viewed as another major test of investor appetite for artificial intelligence-related investments.
The combination of easing geopolitical risks, falling oil prices and renewed strength in technology stocks is expected to provide a positive backdrop for Australian shares at the start of trading
