The S&P/ASX 200 extended its gains for a second consecutive session on Thursday, closing 84.5 points higher at 8,878.1, representing a 0.96% increase. The benchmark was lifted primarily by a strong performance from mining and gold stocks, while energy shares faced significant headwinds.
Materials led the rally with a 3.7% surge, as base metal prices advanced. Major mining stocks posted solid gains: BHP rose 3.8%, Fortescue Metals climbed 3.7%, and Rio Tinto added 3.2%. The gold sub-index jumped 4.7%, supported by bullion prices hovering near US$4,715 an ounce. The appeal of gold was enhanced by declining bond yields, as the precious metal offers no yield.
The energy sector was the worst performer, sliding 2.9% as oil prices tumbled. ICE Brent crude fell 7.8% overnight before partially recovering to around US$101.73 a barrel during Asian trading hours. The decline in oil prices followed growing optimism about a potential peace agreement between the United States and Iran, which could ease supply concerns. However, the situation remains fluid, with no resolution yet on the Strait of Hormuz, a critical chokepoint for global oil shipments.
Energy stocks were hit hard, with Woodside Energy dropping 4.2% and Santos falling 3.3%. The losses were compounded by an announcement from Australian authorities requiring LNG exporters to reserve 20% of their natural gas output for the domestic east coast market starting July 2025. This regulatory move, described as a "surprise political announcement" by MST Marquee analyst Saul Kavonic, weighed on gas-linked stocks such as Origin Energy, Shell, and Santos.
The Reserve Bank of Australia (RBA) raised its cash rate to 4.35% earlier this week, citing increased fuel and commodity costs as key drivers of inflation. The central bank has now delivered three rate hikes this year, and policymakers have indicated that inflation is likely to remain elevated for some time, partly due to higher energy prices.
Financials provided some support, with the sector gaining 0.5%. Westpac, ANZ, and Commonwealth Bank all edged higher, while National Australia Bank slipped after going ex-dividend, meaning new buyers missed out on the latest payout.
In company-specific news, Tabcorp plummeted 23.5% on the ASX 300 after Australia's financial crime watchdog, AUSTRAC, launched an investigation into the wagering group's anti-money laundering and counter-terrorism financing practices. Shares at one point fell 28% to their lowest level in 10 weeks, as AUSTRAC flagged "serious concerns" about Tabcorp's risk management.
Market sentiment remains cautious. While the rally was broad-based, analysts warn that it may be fragile. "Optimism over no further escalation has turned into euphoria," said Ipek Ozkardeskaya of Swissquote, cautioning that past hopes for peace have faded before. If negotiations break down, oil prices could rebound, reigniting inflation fears and potentially derailing the ASX's miner-driven rally.
