The Overnight Report: Markets Soar On Hope

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This story features KOALA COMPANY LIMITED, and other companies.
For more info SHARE ANALYSIS: KOA

Reported peace statements from President Trump and Iran were enough to fuel the strongest daily raily in the S&P500 and Nasdaq100 since May 12 last year.

It was also the last day of the month and of the quarter.

ASX200 futures are indicating a strong start for April 1st, ahead of a shortened week and media reports President Trump is "seriously considering taking Kharg Island".

Good Morning,

The Australian market reversed earlier losses on Tuesday to close the end of the month and quarter with a small gain for the closing session.

The ASX200 rose 21 points or 0.25% to 8,482 with technology leading the gains, up 3%, and energy lagging, down -1.3% on the back of President trump’s comments suggesting an end to the war with Iran might be beckoning.

An update by the Wall Street Journal had ignited a stronger rally earlier in the session, but that push higher deflated towards the end of the day.

Market Overview: J.L. Bernstein extract

Peace Hints Spark a Relief Rally

Both the US and Iran signaled willingness to negotiate an end to the fighting.

Trump told aides he’d walk away even without reopening the Strait of Hormuz and posted on Truth Social that Iran has been “essentially decimated.”

Iran’s President Pezeshkian told the EU Council president Iran has “the necessary will to end this war” but wants guarantees.

I’m skeptical. We’ve heard versions of this before, and the strait is still closed.

Consumers Hit a Wall

Gas crossed US$4 a gallon nationally for the first time since August 2022. Diesel hit US$5.45.

At the same time, February hiring fell to its lowest rate since April 2020 at 3.1%.

Job openings slipped to 6.88m. Employers are hoarding the workers they have but refusing to add headcount. 

Nvidia Spreads the Wealth Nvidia

Nvidia put US$2bn into Marvell Technology to co-develop AI infrastructure and silicon photonics.

Jensen Huang called it the “inference inflection.”

Nvidia is buying its way into a broader hardware ecosystem, and Marvell shares ran up over twelve points on the news.

NAB Markets Today Research extract

The month of March ended on a positive note amid hopes the Iran conflict may be edging toward a diplomatic off-ramp.

Equities rallied strongly, led by US stocks, while bonds caught a bid as oil prices eased from recent highs. The S&P500 rose 2.97%, the NASDAQ surged 3.83% and European equities also finished higher, while the dollar lost some of its recent safe-haven support. 

The improvement in risk appetite over the past 24 hours was initially triggered by a Wall Street Journal report noting President Trump had told aides he’s willing to end the US military campaign against Iran even if the Strait of Hormuz remains largely closed.

The market seemed to take this as a positive step, however, it is important to note what matters is for the Strait of Hormuz to open again and for the flow of vessels in the Middle East to get back to where it was before the conflict.

Overnight the positive vibes were supported by news Iran had signalled a conditional willingness to end the war. President Masoud Pezeshkian reiterating Tehran has “the necessary will” to halt hostilities, provided its longstanding demands are met, including guarantees against future attacks and recognition of its authority over the Strait of Hormuz.

The Wall Street Journal reported US officials believe a direct mission to reopen Hormuz would extend the conflict beyond President Trump’s desired timeframe, reinforcing the perception Washington is looking for an exit rather than escalation.

Also overnight, President Trump urged countries reliant on Middle East energy flows to take responsibility for reopening Hormuz themselves, telling them to “go to the Strait and just take it,” while signalling the US may not remain engaged much longer. 

Meanwhile, policy tensions surfaced within the G7, with ECB President Christine Lagarde pushing back against Treasury Secretary Scott Bessent’s view that the economic fallout would be short-lived, warning instead the destruction already inflicted implies more persistent damage, particularly for energy-exposed Europe.

As for the conflict itself, yesterday Iran hit a fully laden Kuwaiti oil tanker anchored in the Strait of Hormuz outside of Dubai’s port, representing a further escalation in the conflict and highlighting how dangerous the area remains. 

While Israel confirmed its intention to sustain military operations in southern Lebanon, and Iranian missile attacks on Israel and Gulf shipping continued. It is worth noting the conflict remains active despite tentative diplomatic signals.

Moving on to economic data releases, the US JOLTS job openings fell to 6.88m in February from a revised 7.24m previously, broadly in line with expectations but reinforcing signs of cooling labour demand ahead of the Iran war.

Hiring slowed sharply, with the private-sector hiring rate dropping to 3.3%, the lowest since early 2010, while net job creation turned negative, reflecting weak hiring rather than rising layoffs. Quits edged lower, consistent with easing wage pressures over coming quarters.

Consumer confidence surprised to the upside, with the Conference Board headline index rising to 91.8 in March. The lift was driven entirely by an improvement in the present-situation component, while expectations fell further, pointing to subdued forward-looking spending momentum.

The Conference Board’s labour market indicators remain soft, with the net jobs differential near its weakest since early 2021. Notably, one-year inflation expectations jumped to 5.2%, reflecting the surge in energy prices.

On the other side of the Atlantic, the Euro area inflation surprised to the upside, with headline CPI jumping to 2.5% from 1.9%, driven by higher energy prices, while core inflation edged down to 2.3%.

ECB Governing Council commentary struck a hawkish tone, emphasising vigilance on inflation risks and keeping the option of an April rate hike firmly on the table, with markets pricing slightly better than even odds of a 25bp move

US Treasury yields declined across the curve aided by the easing in oil prices. Relative to yesterday’s closing levels 2y UST yields are down -4.3bp to 3.79% (-1.6bps lower since Sydney’s close) while the 10-year yield fell -4bp to 4.31% (down -1.2bps overnight). 

European rates moved in tandem, with 10-year German bund yields down -3.1bp to 3.00% despite the upside inflation surprise. Australian bond futures outperformed, with the implied 10-year yield falling a notable -10bp relative to yesterday’s closing levels (in price terms AU Bond futures gained 3bps to 95.02 overnight).

In currencies, the US dollar lost ground as risk appetite improved, with the DXY down -0.6% over the past 24 hours ( -0.5% overnight) while G10 FX pairs outperformed broadly, led by EUR (+0.7%), AUD (+0.6%) and SEK (+0.7%). 

EM currencies also strengthened. The yen firmed modestly as yields declined, while CHF underperformed slightly as safe-haven demand faded.

The AUD has climbed above 69c after trading to an overnight low of 0.6834.

ANZ Bank Australian Morning Focus, Commodities extract

Crude oil prices remained volatile as traders contemplated an escalating conflict in the Middle East against efforts to find a diplomatic solution.

Brent crude gained in early trading after reports of another attack on an oil tanker. The Kuwait crude carrier Al-Salmi was attacked by Iran in an anchorage area near a Dubai port.

Prices pared gains after the Wall Street Journal reported the Trump administration is considering ending the war even if the Strait of Hormuz remains largely closed. Trump told the New York Post the US is not going to be there too much longer, calling the campaign against Iran “an obliteration”.

Compounding Middle East supply disruptions is a recent drop in Russian crude exports. They tumbled last week to their lowest level in more than a year. This followed a series of drone attacks by Ukraine which hit key infrastructure. The extended supply disruptions and elevated prices are doing little to boost activity in the US shale oil industry.

The number of crude oil rigs operating in the US fell by -5 to 409 over the past week, according to Baker Hughes. The lack of interest suggests producers remain concerned this is still a short-term event, and that prices will revert back to pre-conflict levels should oil flows through the Strait of Hormuz quickly resume.

The prospect of an end to the Middle East conflict also weighed on global gas prices. Both European natural gas and North Asia LNG markets ended the session lower. Nevertheless, the supply issues persist.

Indian importers of LNG are struggling to secure spot cargoes as the disruptions to Qatar exports permeate across the market. GAIL India didn’t award a tender seeking a US cargo for loading in May, while Indian Oil Corp had to reissue a tender for April delivery.

The shortages are also pushing many countries to boost coal-fired power.

Japan said it would expand the use of such plants. In Europe, Germany is considering reactivating mothballed coal-fired plants as a way to curb high electricity prices. This has pushed the Newcastle coal futures for April to US$144/t, the highest price for a front month contract since October 2024.

Sentiment in the base metals market received a boost following the release of economic data from China. Factory activity expanded for the first time this year, with the official manufacturing purchasing managers index reaching 50.4 in March. The improvement was driven by China’s exports, which surged 22% in the first two months of 2026.

Export order numbers in March suggest external demand will remain supportive. This also reinforces our conviction that China’s Q1 GDP growth is likely to exceed 4.5%.

Copper also found some support from supply side issues. Chile posted its lowest monthly copper output in almost nine years, highlighting the challenges the industry faces.

Production totalled 378.6kt in February, down -8.5% y/y. Rains in northern Chile and high seas interrupted logistics operations in the summer months.

Gold extended recent gains as the USD and bond yields pushed lower on the back of talks between US and Iran over the Middle East conflict.

Ceasefire Dividend Flags Wave, Stephen Innes, SPI Asset Management extract

Global markets staged a sharp reversal into the month-end as ceasefire dividend flags waved across Wall Street, with investors rapidly repricing the possibility the conflict disrupting global energy flows may be approaching an off-ramp.

The shift followed growing signs the conflict may be shorter than initially feared, with Iran, more specifically, President Pezeshkian, indicating a willingness to end hostilities under certain conditions and US leadership suggesting a limited engagement timeline.

That combination was enough.

Because markets do not wait for peace. They move on the first credible hint the worst-case path may not materialize.

For weeks, crude had been trading like a pressure gauge on the global system, rising not just on disruption but on the fear the Strait of Hormuz would remain impaired for an extended period. That is where the real premium was embedded. Not in what had already been lost, but in how long it might stay lost.

When that timeline began to compress, even slightly, oil had to adjust.

Oil did not fall because supply returned. It fell because the market no longer needed to price a prolonged chokehold with the same intensity.

A shorter conflict does not eliminate disruption, but it dramatically reduces the probability of a systemic energy shock. That is enough to pull premium out of the front end of the curve.

At the same time, Iran’s signal it is prepared to end the war if its demands are met reintroduced something the market had been unable to price in for weeks. Conditional normalization.

Not barrels flowing tomorrow, but the possibility that they could return sooner than expected.

IRAN’S PRESIDENT PEZESHKIAN STATES THEY ARE PREPARED TO END THE WAR IF THEY RECEIVE GUARANTEES

That possibility is all oil needs to move.

Then the positioning unwound.

Crude had rallied aggressively into the conflict, pulling in macro funds, momentum strategies, and systematic flows that were all leaning in the same direction.

When the narrative stopped deteriorating, the marginal buyer disappeared. The market flipped from chasing upside to protecting gains, and once that shift takes hold, price moves quickly.

Once oil’s feverish rise gave way to a falling knife, the rest of the cross-asset complex dominoed in classic de-escalation correlation, one by one falling back into line.

Lower crude eased inflationary pressures, allowing US yields to slip back below 4.30%. That in turn removed one of the key constraints on equities.

At the same time, the Federal Reserve remains in no rush to tighten in an environment where growth signals had already been softening before the conflict escalated.

That pause by Powell actually stabilized the unstable war room table.

When the central bank steps traders back from the rate-hike vortex, markets are free to respond to the next marginal shift in conditions. And right now, that shift is coming from energy.

Overlay that with one of the largest month-end pension rebalancing flows in decades, with US pensions modelled to buy US$34bn of equities, and a market where systematic strategies have built up meaningful short exposure, and you have the ingredients for a powerful squeeze.

Stocks were not just lifted by improving sentiment. They were forced higher by flows and positioning.

The dollar tells the same story.

The US markets’ relative outperformance in March created a hedging imbalance that needed to be rebalanced. As global portfolios adjust, dollars are sold, and foreign currency exposure is rebuilt. That flow reinforces the easing in financial conditions, amplifying the move in risk assets.

Put it all together, and the sequence becomes clear.

Oil is lower because the market repriced the duration of the disruption. Yields are lower because inflation expectations eased. The dollar is softer as defensive positioning unwinds. Equities are higher as flows, positioning, and relief are combined into a single move.

From taking a gut punch to hauling itself back onto the rally wagon in just two sessions, one of the cleanest Turnaround Tuesdays we have seen in a while.

There has been growing speculation the White House is looking for a moment it can frame as mission accomplished, where any credible off-ramp will do to avoid drifting into the costly uncertainty of a ground engagement. What we may be seeing now is the early outline of that exit narrative taking shape.

At the same time, a willingness is beginning to emerge from both sides and in markets as in diplomacy, it takes two to tango.

President Donald Trump has signalled he is prepared to end the war without forcing a reopening of Hormuz, while President Masoud Pezeshkian has indicated Iran is ready to end hostilities if guarantees against further attacks are secured.

The real question now is whether this is a unified signal out of Tehran or the early signs of a split screen between the civilian government and the IRGC, because that divide will determine whether this peace narrative has legs or gets pulled apart at the seams.

And even if Tehran leans toward de-escalation, the path forward still runs through Tel Aviv. The aerial campaign would need to ease, and that is far from assured.

There is a growing sense that Israel’s objectives extend well beyond containment, leaning more toward a structural reset of the regime itself, which turns any ceasefire into less of a decision and more of a negotiation between competing endgames.

This is where the next phase will be decided.

Not by headlines alone, but by confirmation in price. Oil must continue to soften to validate the easing of supply fears. Yields must remain contained to keep financial conditions supportive. The dollar must continue to weaken to signal that capital is comfortable rotating back into risk.

Because in markets like this, the price is not reacting to reality. It is trying to anticipate it.

And when the market starts pricing peace before it sees it, you are no longer trading the war. You are trading the gap between expectation and outcome.

That gap is where the opportunity lives. It is also where the trap is set.

Corporate news in Australia

-Koala ((KOA)) IPO traded up 12% 

-Glow Capital buys majority stake in Menzies Facilities Services

·-Bain advances Estia sale with $2.2b–$2.7b bids

-Spotlight Retail may buy Barbeques Galore, five stores to close

-Macquarie Group ((MQG)) may sell Christchurch fibre network for NZ$1bn

-Count Limited ((CUP)) launches $40m raise to buy Oracle Advisory

-Alceon raises $100m private equity fund, reaches $60m milestone

-Ox Capital, backed by Challenger ((CGF)), is closing after nearly five years of operation

– Lendi co-founder’s AI startup gains Atlassian and Gilbert as advisors

On the calendar today:

-NZ Feb Building permits

-AU Feb Dwelling Approvals

-JP 1Q Tankan

-EZ Feb Unemployment

-US Feb Jolts

-US March ADP employment

-US March ISM Manu

-XX Global PMIs

-ARB CORPORATION LIMITED ((ARB)) ex-div 34.00c (100%)

-ASX LIMITED ((ASX)) AGM

-HARVEY NORMAN HOLDINGS LIMITED ((HVN)) ex-div 14.50c (100%)

-LINDSAY AUSTRALIA LIMITED ((LAU)) ex-div 2.10c (100%)

-RIDLEY CORPORATION LIMITED ((RIC)) ex-div 5.10c (100%)

FNArena’s four-weekly calendar: https://fnarena.com/index.php/financial-news/calendar/

The Australian share market over the past thirty days…

For more detail go to FNArena’s Australian Broker Call Report, which is updated each morning, Mon-Fri.

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