Index Update: Australian equities finished higher on Tuesday, with the S&P/ASX 200 rising 44.80 points or 0.50% to close at 8,970.80, marking its highest level in the past 20 sessions. The benchmark index has now advanced 2.77% over the last five trading days and sits just 2.52% below its 52-week peak.

Market sentiment remained constructive, supported by optimism around a possible de-escalation in Middle East tensions. This came even as a blockade of the Strait of Hormuz was reported, with investors appearing to focus on the prospect of a resolution rather than immediate risks. Oil prices moved lower during the session, reflecting this shift in sentiment.

Sector performance was moderately positive, with six of the eleven sectors closing in the green. Information Technology emerged as the standout performer, climbing 3.67% on the day and extending its five-day gain to 0.30%, providing a key boost to the broader market.

Macro Update: The escalating Iran conflict is emerging as a central concern for the global economy, coinciding with the start of meetings led by the International Monetary Fund and the World Bank. Governments worldwide are increasingly rolling out support measures for households and businesses, while nations such as Nigeria have called for stronger international assistance.

The ongoing energy shock is expected to dominate discussions, with rising fuel costs feeding into broader inflationary pressures. Policymakers are grappling with the risk of a prolonged economic strain driven by geopolitical uncertainty.

In Australia, the situation is being described as a “stagflationary shock,” with confidence among households deteriorating sharply. According to the Reserve Bank of Australia, weakening economic activity alongside surging fuel prices and inflation has created a deeply challenging environment, raising concerns over growth and stability in the months ahead.

Top Market Movers: Among the top gainers, Deep Yellow Limited (ASX:DYL) rose to AUD 1.940, up AUD 0.170 (+9.60%), followed by IperionX Limited (ASX:IPX) at AUD 4.780, gaining AUD 0.400 (+9.13%), and Capstone Copper Corp. (ASX:CSC) at AUD 12.700, up AUD 0.800 (+6.72%). On the downside, GQG Partners Inc. (ASX:GQG) fell to AUD 1.705, down AUD 0.065 (-3.67%), alongside Downer EDI Limited (ASX:DOW) and Vulcan Energy Resources Limited (ASX:VUL), which also declined.

Commodity Update: Asian stocks moved higher on Tuesday, while oil prices and the safe-haven U.S. dollar weakened after Washington said it remained engaged with Tehran despite blocking Iran’s ports following failed peace talks. Gold rose 0.49% to USD 4,790.90 per ounce, silver gained 1.44% to USD 76.73, and copper added 0.24% to USD 13,048.00. Brent crude slipped 0.76% to USD 98.62 a barrel after briefly moving back above USD 100.00.

Our Stance: Australian equities extended gains on Tuesday, with the S&P/ASX 200 rising 0.50% to a 20-day high, supported by strength in technology stocks and improving sentiment around potential easing in Middle East tensions. The index has gained 2.77% over five days, with six sectors finishing higher. However, global uncertainty persists as the Iran conflict fuels energy-driven inflation risks, weighing on economic outlooks. Mixed commodity moves and uneven stock performance reflect this caution, suggesting the rally may face near-term volatility despite underlying resilience in market sentiment.

The S&P/ASX 200 advanced by 44.80 points in the latest session, forming a bullish candlestick that reflects improving investor sentiment. On the daily chart, the index continues to trade above its 21-period Simple Moving Average (SMA), which is acting as a key dynamic support and reinforcing strength in the broader price structure. Sustained trading above this level is likely to support near-term stability and help limit downside risks. However, immediate support is positioned near the 8,870 mark. A decisive and sustained break below this level could weaken market sentiment and expose the index to a deeper corrective phase in the near term, potentially increasing volatility and prompting cautious investor positioning.