SYDNEY — Australian shares posted modest gains Thursday, with the benchmark S&P/ASX 200 Index closing at 8,973.2 after adding 21.4 points, or 0.24 percent, as investors welcomed signs of de-escalation in the Middle East following a reported US-Iran ceasefire.

FTSE 100 Surges 0.8% Today as Oil Eases and Markets

The mild advance followed a robust 2.55 percent surge the previous session to around 8,951.80, when initial news of the truce triggered a sharp drop in oil prices and boosted global risk appetite. Thursday's session saw some consolidation as markets digested the durability of the agreement and its potential impact on energy markets and inflation.

Trading volume stayed healthy amid mixed global cues and steady domestic conditions, including the Reserve Bank of Australia's recent rate hikes and resilient commodity prices. The index has now staged a solid recovery from early April lows but sits below its February peak near 9,200.

Geopolitical Relief Supports Sentiment

Developments in the Middle East remained the dominant theme. Reports of a ceasefire between the United States, Israel and Iran eased immediate fears of broader conflict, helping to calm oil markets after earlier spikes. While the truce appeared fragile and the Strait of Hormuz situation required monitoring, the initial positive reaction lifted investor confidence across risk assets.

Oil prices moderated overnight, providing a balanced backdrop for Australian energy and resource stocks. ASX 200 futures had pointed to a slightly firmer open, and the market traded in positive territory for most of the session before closing with a small gain.

Market strategists described the move as cautious optimism. "The ceasefire news removes a major near-term risk, but investors remain watchful for any signs of renewed tensions that could disrupt global oil flows," said one Sydney-based analyst. A sustained period of calm would support growth-sensitive sectors, while any renewed supply concerns could reignite inflation worries.

The Australian dollar held firm, gaining modestly against the US dollar as the improved risk tone persisted.

Sector Moves Reflect Selective Buying

Financial stocks and consumer staples offered steady support, acting as defensive anchors in an uncertain environment. Banks traded mostly higher on expectations of a more stable global backdrop despite elevated domestic interest rates.

Materials and energy sectors showed mixed performance. Iron ore and base metals producers faced some pressure from softer Chinese demand signals, but gold miners gained ground as the precious metal retained its safe-haven appeal. Lithium names saw selective interest tied to longer-term supply dynamics.

Technology stocks, recent outperformers, added modestly as global peers traded steadily. Healthcare and industrials remained relatively flat, while some retail names benefited from hopes of improved consumer sentiment if energy costs ease.

Bendigo and Adelaide Bank attracted attention after detailing cost-saving initiatives, including job reductions, in response to the higher-rate environment. Packaging firm Orora Ltd shares moved on company-specific news linked to supply chains.

Domestic Economy Shows Resilience

The Reserve Bank of Australia has raised its cash rate twice in 2026, with the most recent increase in March bringing the target to 4.10 percent to tackle persistent inflation. Markets are pricing in roughly a 60 percent probability of another 25-basis-point hike at the May board meeting.

Despite tighter monetary policy, Australia's economy has demonstrated resilience, underpinned by strong commodity export revenues. The RBA's Index of Commodity Prices rose 2.6 percent in March, with annual growth reaching 12.8 percent — the strongest pace since early 2023 — led by gains in gold, lithium, coking coal and rural commodities.

This commodity strength has helped buffer the mining-heavy ASX index even as higher borrowing costs constrain household spending and the housing market.

Economists anticipate the labor market will remain tight, with low unemployment, though prolonged geopolitical uncertainty could pose risks if energy prices rebound sharply.

Global Markets Provide Supportive Backdrop

Wall Street delivered a positive lead overnight, with the S&P 500 climbing more than 2 percent, driven by industrials and communication services. The Dow Jones Industrial Average also advanced, while volatility measures eased, signaling reduced fear among investors.

In Asia, regional markets showed varied performance, with Chinese shares benefiting from stimulus expectations and Japanese equities trading cautiously.

The ASX 200's recent recovery has been impressive, rebounding from sub-8,500 levels in early April after a volatile March pressured by war concerns, inflation and a technology sell-off. Thursday's small gain extends the positive momentum for the week while highlighting the market's sensitivity to international headlines.

Outlook Remains Data-Dependent

Focus now shifts to upcoming US economic releases and any further updates on the Middle East situation. A durable reduction in oil prices would alleviate global inflation pressures, benefiting import-reliant economies like Australia and supporting consumer and transport-related stocks.

Domestically, investors will watch for fresh corporate earnings and any hints from the RBA ahead of its May meeting. Dividend-focused stocks in defensive sectors could continue to appeal if volatility lingers.

For retail and institutional investors alike, the current setting favors selectivity. High-quality resource companies with robust balance sheets, alongside banks offering attractive yields, may stand out, while growth stocks face continued valuation scrutiny.

The S&P/ASX 200's close at 8,973.2 reflects ongoing resilience in the face of external shocks. Supportive commodity prices and a somewhat stabilizing global risk environment provide a foundation for guarded optimism as 2026 progresses.

As trading concluded in Sydney, attention remained fixed on whether the US-Iran ceasefire can hold and deliver lasting stability. In a year defined by volatility, Australian equities continue to showcase their dual character — closely tied to global events yet bolstered by strong underlying resource fundamentals.