Australian sharemarket surges as US-Iran ceasefire sends gold and dollar soaring

The Australian sharemarket soared on Wednesday, with gold and the Australian dollar taking off after the US/Israel and Iran agreed to a two-week ceasefire.

Re-opening of the Strait of Hormuz will help ease the global energy supply constraint that spiked in February into March.

The ceasefire allows ships to pass through the Strait of Hormuz, brokered by Pakistan who made an appeal to US President Donald Trump to push back his deadline.

Following the news, the ASX 200 index rose 228.80 points, or 2.62 per cent, to 8957.60, while the broader All Ordinaries climbed by 249.5 points, or 2.80 per cent, to 9170.70.

The close saw eight of the 11 sectors trading in the green, with only staples, utilities and energy down.

“The moves have been large and predictable,” Capital.com market analyst Kyle Rodda said.

The sharemarket is inching closer to the record 9202 points set on March 11, as it set a new 20-day high.

Stocks had dipped ahead of Wednesday’s deadline, but that tension broke in early morning when Mr Trump took to social media to announce a suspension of the bombing with only two hours to spare.

“The risks haven’t disappeared entirely. There’s a chance the ceasefire collapses or a deal doesn’t materialise before the two-week deadline. If either happens, we could see the strait closed again and markets could plunge back into crisis,” Mr Rodda said.

The global energy market saw demand evaporate following this announcement with brent crude oil plunging by double digits — 14.07 per cent to $US93.89 a barrel, while WTI crude dived 15.15 per cent to $US95.84.

Elsewhere, BHP soared by more than three per cent in local trading.

The announcement also drove demand for precious metals, which had been heavily sold off during the conflict in the Middle East.

Gold surged 2.49 per cent to a staggering $US4825.40 an ounce, and silver rocketed 5.88 per cent to $US77.23 an ounce.

The major banks were among the beneficiaries as investors racked up stocks sold off in March.

NAB was the standout, jumping 3.85 per cent to $44.53, while ANZ climbed 2.9 per cent to $38.34.

Westpac added 2.82 per cent to $41.95, and Commonwealth Bank rose 1.85 per cent to finish at $180.21.

The Australian dollar is up by more than one per cent, with the local currency buying 70.7 US cents, marking the US dollar’s lowest level in a month compared to the AUD.