Australian share market: Investors trickle back after Trump postpones more attacks on Iran, oil prices fall

A battered Australian share market opened sharply higher on Tuesday after Donald Trump revealed he had ordered the military to postpone strikes against Iranian power plants following what he said had been “productive conversations” with Tehran.

The S&P-ASX200 soared 1.5 per cent in the opening few minutes at 8488 points.

But the euphoria evaporated steadily fell back to a gain of just 0.3 per cent to 8391.8 at 9am.

The index closed at a 10-month low of 8365.9 on Monday as gains in energy, utility, healthcare and consumer discretionary stocks partly offset falls by mining, property and industrial shares.

More than $300 billion has been wiped from the bourse since the US and Israel started their campaign in the Middle East at the end of last month.

Tuesday gains, while cautious, mark a change in sentiment from Monday when the president’s threats spooked investors who bolted for the sidelines amid fears the four-week war could further squeeze global oil supply while Iran keeps tight grip on access to the Strait of Hormuz.

But trickle of ships has successfully exited the Persian Gulf in recent days, even as the bulk of traffic through the critical artery remains effectively stalled. The first supertanker transporting Iraqi crude through the strait since its near-closure was observed, according to Bloomberg.

Mr Trump claims overnight about positive talks with Iran settled oil prices, which dropped more than 10 per cent, and saw main markets in the US closed up more than one per cent.

“I am pleased to report the United States of America and the country of Iran, have had, over the last two days, very good and productive conversations regarding a complete and total resolution our our hostilities in the Middle East,” Mr Trump told his Truth Social followers.

But investors remain cautious after Iran’s Parliamentary speaker Mohammad Baqer Ghalibaf posted on social media that no talks had been held with the US.

“Headlines have been very choppy since, with many Iranian officials denying that negotiations are taking place while President Trump effectively doubles-down on the claim,” Westpac said.

“Markets are left striking a balance between welcoming the tentative news of possible de-escalation while weighing the immense uncertainty still clouding this progress. “

The 11 sectors that make up the S&P-ASX200 were a mixed bag by 9am after all climbing into the green on the opening 30 minutes.

Energy giants took a hit on the falling oil price, with Woodside Energy, Santos, Karoon Energy, Yancoal and Beach Energy the top-five worst performers early in the session, each dropping more than 4 per cent.

Iron ore players Rio Tinto, Fortescue and BHP all posted solid gains above 2.5 per cent.

More to come