Australia ASX 200 hits two-month high as oil retreats

Australia’s S&P/ASX 200 closed at its highest level in two months Monday, reversing a week of declines as optimism grew that Middle East tensions were easing. Crude oil pulled back from session highs. Traders said the pivot reflected a repositioning out of defensive and energy-heavy bets built during the earlier escalation.

Energy stocks lagged the broader market. Woodside and Santos each lost ground as the supply premium baked into crude prices began to fade. Airlines and transport operators picked up the slack. Qantas rose on lower jet fuel cost expectations, while retailers and logistics names gained. Traders described the session as a textbook unwind of the positioning that had dominated the prior fortnight.

Mining stocks were mixed. BHP and Rio Tinto rallied with the broad market. The sector lacked a commodity-specific catalyst. Iron ore futures held steady in Asia, with traders watching port-side inventory data out of China. Gold miners, which had benefited from a flight to safety earlier in April, gave back some of those gains as real yields stabilised.

Rate-sensitive names saw a rotation in. Banks rose on the view that lower oil and reduced geopolitical risk would give the Reserve Bank more flexibility on its rate path. Commonwealth Bank and Westpac were among the top index contributors. Traders cited a shift in inflation expectations rather than any change in domestic data.

The move does not alter the underlying commodity super-cycle thesis for Australia’s export complex. The market is repricing the probability of a regional supply shock. If the ceasefire holds, oil’s risk premium will continue to bleed lower, favouring transport and discretionary stocks over energy. If it fails, the February low in the ASX 200 becomes the level to watch.

The index is testing resistance at the 50-day moving average. A close above that with volume would confirm room to extend into early May, when the RBA meets. The next data point on the calendar is Wednesday’s CPI print. Traders said a soft number would accelerate the rotation out of defensives and back into cyclicals.