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

A battered Australian share market has eked out only a small gain following a stunning start to trade on Tuesday, prompted by Donald Trump’s order to postpone strikes against Iranian power plants and what he said had been “productive conversations” with Tehran.

The S&P-ASX200 soared 1.5 per cent in the opening few minutes but steadily retreated throughout the session to close up just 0.16 per cent to 8379.4 points.

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, marked 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 a 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, only six managed to end the day in positive territory. Miners were the biggest winners, adding a collective 3 per cent, while utilities and real estate stocks also enjoyed solid gains.

Energy giants took a hit on the falling oil price. Woodside Energy shed less than 0.5 per cent but Santos closed down 2 per cent.

Iron ore players Rio Tinto, Fortescue and BHP all posted solid gains of about 3 per cent.

“While Trump’s announcement has effectively defused the immediate 48-hour ‘time bomb’ ultimatum, the clock has simply been reset for Friday,” said IG’s Tony Sycamore.

“That’s the same day the 2200 Marines of the 31st Marine Expeditionary Unit, along with the USS Tripoli and USS New Orleans, are expected to arrive in the Gulf region.

“Looking ahead, the situation in the Middle East will remain the dominant driver for asset prices — particularly whether the Strait of Hormuz can be reopened before more lasting economic damage is done.”