United States
Wall Street staged a broad rally overnight as a pullback in oil prices offered relief to investors who have spent weeks navigating the fallout from the Middle East conflict. The S&P 500 advanced 1% with all 11 industry sectors finishing in the green, led by information technology. The Nasdaq 100 climbed 1.1% and the Dow Jones Industrial Average added 0.8%.
The catalyst was a retreat in crude prices after reports emerged that a trickle of tanker vessels had begun navigating the Strait of Hormuz, the critical waterway that has been largely shut since hostilities escalated. The International Energy Agency added to the improving mood, signalling it has further emergency reserves available for release beyond the record stockpile draw already agreed upon. West Texas Intermediate briefly spiked to US$102.44 a barrel before settling sharply lower at US$93.52, a decline of 5.3% on the session.
President Donald Trump continued to press allies to help reopen the strait, while Treasury Secretary Scott Bessent told CNBC the US was allowing Iran to continue shipping oil through the route. Bessent suggested crude could be trading well below US$80 within a couple of months once the conflict subsides.
The easing in energy costs also took some heat out of the inflation outlook, boosting Treasuries. The US 10-year yield fell five basis points to 4.22%. All eyes now turn to the Federal Reserve’s policy decision later this week, where officials are widely expected to hold rates steady. Evercore sees a possible hawkish tilt in the updated economic projections but expects the median forecast to still show a cut this year.
Nvidia was among the session’s standouts, rising 1.6% after chief executive Jensen Huang told the company’s GTC conference it expects to generate at least US$1 trillion in AI chip sales through 2027, roughly doubling its previous guidance. In other corporate news, Meta Platforms struck a deal worth up to US$27 billion over five years for AI infrastructure access from cloud provider Nebius Group, while OpenAI was reported to be in advanced talks to form a roughly US$10 billion joint venture with private equity firms. Intel also featured after announcing its Xeon 6 chip will power Nvidia’s next-generation DGX Rubin systems.
On the macro front, Moody’s Analytics chief economist Mark Zandi flagged the probability of a US recession within the next year at 49%, underscoring how the energy shock is clouding the outlook even as Morgan Stanley’s equity strategy team maintained a constructive view, arguing corporate earnings growth of 13% and significant fiscal support differentiate the current environment from prior oil-driven downturns.
Europe
European equities found their footing on Monday, with the Stoxx 600 rising 0.4% after a key UAE oil hub resumed operations, easing concerns about energy supply disruptions. A drone attack on the UAE’s Shah gasfield had briefly rattled sentiment before authorities confirmed the fire was contained and operations were being assessed.
Banking stocks were the session’s headline act. UniCredit launched a €35 billion takeover bid for German lender Commerzbank, sending the target’s shares surging 8.6% and lifting Deutsche Bank 1.6% in sympathy. Takeover speculation also lifted Poland’s mBank by 6.1%.
Real estate led the sector board with gains of 1.6%, followed by energy stocks, which added 1.1% as Equinor and Aker BP advanced. Shell gained 1.4% after reporting strong LNG demand despite the war-related volatility. Insurers also outperformed, rising 1% after Zurich Insurance was reinstated at outperform.
On the downside, automotive names slipped 1.2% with Mercedes-Benz and BMW among the laggards, while chemicals edged lower after K+S dropped 5.4% on a broker downgrade. In healthcare, Amplifon tumbled 14.3% after agreeing to acquire GN Store Nord’s hearing-aid business, and a London Metal Exchange trading halt created choppy conditions for basic resources names.
Australia
Australian shares are poised for a stronger open on Tuesday, with S&P/ASX 200 futures up 66 points, or 0.8%, to 8,646 near 7am AEDT. That follows Monday’s 0.4% decline to 8,583.40, where losses in materials outweighed gains in financials as investors braced for a pivotal Reserve Bank decision.
The RBA hands down its second rate call of the year at 2.30pm AEDT, with Bloomberg Economics and market pricing pointing to a 25 basis point hike that would take the cash rate to 4.10%. The bank will hold a press conference at 3.30pm. Policymakers face an uncomfortable balancing act: the Iran conflict has reignited inflation pressures through surging fuel costs, while Citi’s analysis suggests every 10 cents per litre rise in petrol prices strips roughly $1.6 billion annually from household spending. Citi economists now expect hikes in both March and May.
NAB data showed consumer spending rose 0.4% in February, taking the annual pace to 6.7%, though the bank noted the figures likely do not yet capture the full impact of February’s rate rise or the recent fuel price spike. Travel spending fell for a third consecutive month.
In corporate news, New Hope reported a sharp pullback in half-year earnings, with net profit falling 84% to $54.3 million on weaker coal prices. Gold miner West African Resources delivered a $567 million full-year profit on the back of 300,383 ounces produced. Separately, the European Union signalled it is close to finalising a long-awaited trade deal with Australia, with European Commission President Ursula von der Leyen describing talks as in their final stretch.
Commodities and Currencies
Oil’s retreat dominated the commodities complex. Brent crude slid 3.1% to US$99.96 a barrel, slipping back below the US$100 threshold, while WTI tumbled 5.3% to US$93.52. The selloff came as a handful of tankers cleared the Strait of Hormuz and the IEA flagged additional emergency stockpiles.
Gold eased 0.1% to US$5,013.42 an ounce, pausing after its remarkable run above US$5,000. Iron ore was essentially flat at US$107.70 a tonne.
The Australian dollar rallied 1.3% to US70.71 cents as the greenback posted its worst session in nearly two months. The weaker US dollar was broad-based, with the euro climbing 0.8% to US$1.1510 and the yen firming 0.4% to 159.14 per dollar. Bitcoin advanced 3% to US$73,921, while ethereum surged 9.2% to US$2,325.
Economic Calendar
AU:
- RBA Cash Rate Target 14:30
This article was written by Calvin Curdie, Rivkin Securities Pty Ltd. Enquiries can be made via [email protected] or by phoning +612 8302 3632.
