Wall St surges as Trump calls off Iran strikes; oil drops

Stocks on Wall Street staged another turnaround after US President Donald Trump called off planned strikes on Iran as peace negotiations got back on track, taking the heat out of oil prices.

Gains were widespread as increasingly volatile chipmakers and semiconductor firms including Micron Technology and Broadcom bounced back, while carriers such as United Airlines and American Airlines surged on cheaper fuel costs, and space companies such as local favourite Rocket Lab rallied ahead of the widely anticipated SpaceX initial public offering.

Across the Atlantic, the European Central Bank hiked its benchmark rates for the first time since September 2023 as the continental monetary authority started its push against the inflationary pressures stemming from the Middle East conflict.

And Australian futures are pointing to a strong start to the day for the ASX, while local manufacturing and travel and migration data are due on this side of the Tasman.

Back and forth

Stocks on Wall Street reversed course again, rallying on news that US President Trump called off a planned strike on Iranian oil infrastructure after a breakthrough in peace negotiations. The US naval blockade would stay in place until the deal was finalised. Brent crude oil futures dropped 2.6% to US$90.67 a barrel at 7am in Auckland.

The CBOE volatility index, known as Wall Street’s fear gauge dropped 11% to 19.71, while the Polymarket prediction market was pricing in a 33% chance of a lasting peace by the end of the month and a 43% chance by the end of July.

The Dow Jones Industrial Average climbed 1.8% in late trading, with Amgen, Honeywell International and Boeing leading the blue chip index higher. The S&P 500 gained 1.5% and the tech-heavy Nasdaq Composite advanced 2%, with chip companies and semiconductor firms rallying in what’s been a week that’s seen artificial intelligence stocks whipsawed.

Oracle slumped 8.6% after its capital spending programme was bigger than analysts predicted, while software firm Adobe was due to report its earnings after the close of trading.

“The mood has improved significantly overnight after President Trump cancelled planned military strikes against Iran, sending Wall Street sharply higher and oil prices lower,” Moomoo market strategy consultant Greg Boland said in a note. “That reversal should provide a much stronger backdrop for New Zealand equities today, with exporters, growth stocks and AI-linked names such as Infratil likely to benefit from the improved risk sentiment.”

Ready for lift-off

Space companies were broadly stronger ahead of SpaceX’s debut, with the conglomerate’s initial public offering oversubscribed. BlackRock was reportedly to have applied for at least US$5 billion of the US$75 billion IPO.

Virgin Galactic surged 26% in late trading and AST SpaceMobile was up 10%, while local favourite Rocket Lab climbed 7.6% to US$113.07.

Stock markets across the Atlantic were also stronger, with the UK’s FTSE 100 up 0.5%, Germany’s DAX nudging up 0.1% and France’s CAC 40 advancing 0.5%.

The ECB hiked its key deposit rate a quarter-point to 2.25%, with president Christine Lagarde warning that soaring fuel prices threatened to revive broader inflation. The kiwi dollar traded at 50.35 euro cents at 7am from 50.20 cents yesterday.

The improved investor sentiment is set to flow through to the antipodes, with Australian futures pointing to a 1.3% gain for the S&P/ASX 200 index when trading opens across the Tasman, while the kiwi dollar rose to 58.20 US cents from 57.98 cents.

Local data to be released today include the Bank of New Zealand-BusinessNZ performance of manufacturing index, and Statistics New Zealand’s travel and migration figures for April.

Reporting by Paul McBeth. Image from Nils Huenerfuerst on Unsplash.