US, Europe markets extend rally ahead of Trump address on Iran

Stocks in Europe and on Wall Street extended their rally on growing optimism the conflict in the Middle East will end in the coming weeks, with US President Donald Trump saying he’ll pull out of Iran in two or three weeks ahead of a national address on Iran.

Brent crude prices fell and the odds of a ceasefire improved in the Polymarket prediction market, lifting travel stocks on Wall Street such as American Airlines and United Airlines, while chipmakers including Nvidia advanced in the buoyant mood.

Meanwhile, reports that SpaceX lodged its confidential filings for an initial public offering helped propel aerospace stocks higher with Sharesies favourite Rocket Lab and AST SpaceMobile among those on the green side of the ledger.

And that upbeat mood is set to carry on into the antipodes, with futures pointing to a positive opening for the ASX in the shortened trading week, while on this side of the Tasman attention will turn to prime minister Christopher Luxon’s cabinet reshuffle.

Big words

US President Trump is poised to make a national address on the military campaign in Iran on Wednesday night in Washington – 2pm New Zealand on Thursday – with expectations he’ll outline his exit strategy having told reporters he expects to be out in the coming weeks.

Brent crude oil futures dropped 3.8% to US$100.05 a barrel at 7am in Auckland while traders on the Polymarket prediction market are pricing in a 40% chance of a ceasefire by the end of April.

Stock markets in the US and Europe extended their rally on hopes for an end to the conflict in the Middle East – a rally New Zealand’s S&P/NZX 50 index missed on Wednesday – with the volatility index, known as Wall Street’s fear gauge – down 6.5% at 23.62.

The Dow Jones Industrial Average was up 0.7% in late trading, led by Boeing, Caterpillar and Goldman Sachs, while the S&P 500 advanced 1%, while the tech-heavy Nasdaq Composite climbed 1.4% with the Magnificent 7 megacap stocks advancing in the buoyant mood.

“Optimism that an end to the conflict may be nearing continued to support risk sentiment overnight, but there has been little in the headlines to suggest concrete steps towards de-escalation, and the key question of reopening the Strait of Hormuz remains unanswered,” ANZ New Zealand economists said in a note. “All eyes will be on Trump’s address in a few hours, but without the announcement of concrete steps to reopen the Strait, the market’s current optimism is likely to be tested – particularly given that a short squeeze in equities appears to have exacerbated the rally overnight.”

Getting spacy

Aerospace companies such as Boeing and Rolls Royce were buoyed by the prospect of SpaceX’s mega-IPO after Bloomberg reported the rocket company had lodged its confidential filing with the US Securities and Exchange Commission in what would be the biggest-ever listing.

Rocket Lab was among those gaining on the news, climbing 3.5% to US$66.50 at 7am in Auckland.

Across the Atlantic, the UK’s FTSE 100 jumped 1.9% while Germany’s DAX advanced 2.7% and France’s CAC 40 gained 2.1%.

Oil companies were among the losers on the day, with Exxon Mobil sliding 4.5% and Chevron sinking 5.6%.

That positive mood is set to continue into the Australasian trading session, with futures pointing to a more modest 0.1% gain for the S&P/ASX 200 index when trading opens across the Tasman. The kiwi dollar rose to 57.59 US cents at 7am in Auckland from 57.33 cents yesterday.

The NZX50 is heading for its fifth straight weekly decline in the Easter-shortened trading week, having declined 0.9% since last Friday’s close.

There are no major local data releases scheduled for today, although the government’s accounts for the eight months ended Feb 28 are due, while New Zealand prime minister Luxon is expected to announce a change in his cabinet line-up today.

Reporting by Paul McBeth. Image from Robb Miller on Unsplash.