United States
Wall Street endured another choppy session on Tuesday as wildly conflicting signals about oil supply through the Strait of Hormuz kept traders on edge, with the S&P 500 ultimately slipping 0.2% to 6,777. The Dow Jones Industrial Average dipped 0.1% to 47,683, while the Nasdaq Composite was essentially flat.
The Iran war, now in its 11th day, continued to dominate sentiment. Oil prices swung violently after the White House contradicted a since-deleted social media post from Energy Secretary Chris Wright that claimed the US Navy had escorted a tanker through the Strait of Hormuz. The Group of Seven nations asked the International Energy Agency to prepare scenarios for a co-ordinated release of emergency oil reserves, while CNN reported Iran is laying mines in the strait, a key conduit handling roughly a fifth of global oil flows.
The volatile energy backdrop also weighed on the bond market, where a weak US$58 billion Treasury auction, a flood of corporate debt issuance and lingering inflation concerns pushed the 10-year yield five basis points higher to 4.15%. Bank of America cautioned that investors betting on a hawkish Federal Reserve response to surging oil prices could be misreading the situation, noting that supply shocks can also lead to stable rates or even cuts given the tension between the central bank’s inflation and employment mandates.
In corporate news, Boeing fell 3.2% after disclosing a wiring flaw on its 737 Max that will delay some deliveries. Amazon raised US$37 billion in dollar bonds in one of the largest corporate offerings on record, with a planned euro tranche that could push the total near US$50 billion. Salesforce is reportedly planning up to US$25 billion of debt to fund a share buyback. After the bell, Oracle surged 7.8% after its cloud infrastructure revenue jumped 84% and the company forecast US$90 billion in revenue for the coming fiscal year, well ahead of consensus expectations.
Europe
European equities bounced sharply on Tuesday, with the Stoxx 600 rallying 1.9% to snap a three-day losing streak as the plunge in oil prices and hints from President Trump that the war could end soon encouraged dip buying across most sectors.
Basic resources led the charge, surging 4.2% as copper and zinc prices advanced. Banks climbed 3.6%, with UniCredit, Santander and Barclays all gaining more than 5%. Technology stocks added 2.9%, boosted by Infineon and Prosus, the latter jumping 9.6% after its key holding Tencent launched a new AI workflow automation tool.
Industrials advanced 2.8%, with Siemens up 5%, while the travel sector gained 2.5% as airlines rebounded from Monday’s selloff. Lufthansa rallied 7.9% after adding Asia and Africa flights to capture long-haul demand displaced by the Middle East conflict.
The energy sector, perhaps counterintuitively, underperformed with a gain of just 0.3% as the sharp drop in crude prices weighed on producers including Equinor and BP. Healthcare also lagged, with Novo Nordisk falling 3% following a downgrade and a warning letter from the US Food and Drug Administration. Food stocks brought up the rear, barely positive, after Swiss chocolatier Lindt tumbled 10% on a guidance cut.
Australia
Australian shares are set for a modestly positive open on Wednesday, with S&P/ASX 200 futures pointing up 24 points, or 0.3%, to 8,719 near 7am AEDT. The gains were pared from earlier in the session as oil’s wild ride tempered enthusiasm.
The Reserve Bank will loom large over proceedings after deputy governor Andrew Hauser struck a decidedly hawkish tone late on Tuesday, warning that a failure to act decisively on inflation expectations could lead to outcomes he described as damaging for everyone. Money markets responded swiftly, pricing in a 62% chance of a rate rise at the March 17 meeting, up from 39% beforehand. The Australian three-year bond yield, sensitive to rate expectations, ticked up to 4.49%, while the 10-year added five basis points to 4.88%.
In the resources space, Rio Tinto will be in focus after securing US$1.175 billion in financing for its Argentina lithium project, while Mongolia is seeking early cash returns from the Oyu Tolgoi copper mine. Lynas Rare Earths extended its supply agreement with Japan to 2038, locking in offtake for neodymium-praseodymium at a market-linked floor price. South32 is reportedly looking to bypass Chinese zinc smelters for its Arizona mine. Macquarie Technology secured $200 million from the National Reconstruction Fund to expand sovereign cloud and AI capabilities.
On the broker front, Goldman Sachs upgraded Sims to neutral, Macquarie cut AGL Energy to neutral, and Evans & Partners raised Orica to positive.
Commodities and currencies
Oil dominated the headlines, with Brent crude plunging around 8% to US$91.05 a barrel and WTI settling near US$83 after dropping as much as 12% intraday in its steepest fall since early 2022. The swings reflected conflicting information about the status of shipping through the Strait of Hormuz, leaving traders frustrated by minute-by-minute shifts in official messaging. Oil prices remain roughly 40% higher since the start of the year.
Gold pared gains as the dollar recovered some ground but still managed a 1.2% advance to US$5,197.85 an ounce. The precious metal has gained around a fifth this year, supported by geopolitical turmoil and trade uncertainty, though exchange-traded fund holdings saw their biggest weekly outflow in more than two years last week. Iron ore edged 0.8% higher to US$103.90 a tonne.
The Australian dollar rallied 0.7% to US71.22¢ after touching US71.70¢, its highest level in more than three years, spurred by Hauser’s hawkish comments. The euro slipped 0.2% to US$1.1614 and the yen eased 0.2% to 158.04 per dollar. Bitcoin gained 1.8% to US$70,195.
Economic Calendar
US:
- MBA Mortgage Applications 22:00
- CPI 23:30
This article was written by Calvin Curdie, Rivkin Securities Pty Ltd. Enquiries can be made via [email protected] or by phoning +612 8302 3632.
