Wall St rallies as US, Iran talk up ceasefire

Stocks on Wall Street surged into the final day of the March quarter as US President Donald Trump and Iranian President Masoud Pezeshkian talked up the prospect of a ceasefire, potentially ending the conflict which triggered an energy shock and drove up oil prices.

The tech-heavy Nasdaq Composite led gainers in the US with the likes of Nvidia, Amazon and Microsoft back on the green side of the ledger as investors regained some of their appetite for riskier assets, even if the Polymarket prediction market is pricing a less-than-even chance of a ceasefire by the end of April.

Meanwhile, Kiwi-born footwear firm Allbirds hit a record low after the wool shoemaker agreed to sell the business’s assets and liabilities to American Exchange Group for US$39 million.

And locally, the upbeat mood is expected to carry through to the antipodes, with futures pointing to a positive opening for the ASX, while Statistics New Zealand’s latest building permits figures are due today.

Cooling tensions

Stocks in the US and Europe gained in their final trading day of a rugged March quarter on growing hopes of a ceasefire in the Middle East after reports that US President Trump was willing to end the assault on Iran without reopening the Strait of Hormuz, while Iran’s president Pezeshkian said the Islamic Republic is willing to end the war, provided certain conditions are met.

The volatility index, known as Wall Street’s fear gauge, dropped 14% to 26.32 and Brent crude oil futures fell 2.6% to US$104.61 a barrel amid the growing optimism for a ceasefire. Still, a drone strike on a Kuwaiti oil tanker off the coast of Dubai highlighted the lingering tensions, and Polymarket traders have priced a 37% chance of a ceasefire by the end of April.

“After a horrid March, risk sentiment is ending the month on a more positive note, on hope that the war can end soon rather than any sign that conditions in the Middle East have changed,” Bank of New Zealand senior markets strategist Jason Wong said in a note. “Markets are trading as if the war will soon be over, based on Trump’s comments and within the last couple of hours Iran’s President was reported as saying that Iran was ready to end the war, while reiterating the country’s demands and seeking guarantees.”

The Dow Jones Industrial Average rose 2.2% in late trading, led by Caterpillar, Nvidia and Boeing, while the S&P 500 was up 2.4% and the Nasdaq jumped 3.3%, with gains for semiconductor firms, software infrastructure and internet content companies among those buoying the indices.

European gains were more modest, with the UK’s FTSE 100 and Germany’s DAX both up 0.5%, while France’s CAC 40 advanced 0.6%.

Ready for take-off

US carriers such as Southwest Airlines and United Airlines climbed between 4% and 8.1%.Airlines, setting a strong lead for local airlines Air New Zealand and Qantas Airways, which both advanced on Tuesday.

Rocket Lab surged 11% to US$63.98 in late trading on the Nasdaq and is on track for its biggest one-day gain since December.

Meanwhile, footwear firm Allbirds sank as low as US$2.15 and was recently down 20% at US$2.37 after agreeing to sell its intellectual property, assets and liabilities to American Exchange.

The positive investor sentiment is set to continue into Australasia, with futures pointing to a 0.6% gain for the resources-heavy S&P/ASX 200 index when trading opens across the Tasman, with gold futures up 3% at US$4,692 an ounce at 7am in Auckland.

The kiwi dollar traded at 57.30 US cents at 7am in Auckland from 57.17 cents yesterday.

Local data today include Stats NZ’s February building consents. Construction intentions dipped in the latest ANZ business outlook survey released on Tuesday, which showed dimming confidence among local firms as they started to digest the impact of the Middle East conflict.

Reporting by Paul McBeth. Image from David Vives on Unsplash.