Australia's share market has had its best session since April 2025 as investors bet the US mid-term election result will reduce the odds of an Iran war escalation.
The S&P/ASX200 surged 230.6 points on Thursday, up 2.61 per cent to a two-month high of 9065.1, as the broader All Ordinaries gained 250.3 points, or 2.8 per cent, to 9205.2.
Most of the 11 local sectors ended the day higher, with raw materials doing some heavy lifting with a more than seven per cent rally as oil prices slumped to two-month lows on hopes the Iran war would end sooner.
"That would take pressure off inflation, ease rate hike fears and gives risk assets the breathing room they’ve been missing for months," eToro APAC lead analyst Josh Gilbert said.
"Oil easing is a big part of the good news, and that will help to decide if this rally has more legs."
Energy stocks tumbled alongside the crude price, while the IT, retail, real estate and healthcare segments rallied.
Markets have leaned into the idea that a weakened Trump administration will be constrained in military spending and therefore more open to a deal to end the conflict.
However, risks of escalation remain with no changes to the chambers of Congress until new lawmakers are sworn in on January 3.
While US tech stocks have slumped at the prospect of regulatory roadblocks for artificial intelligence, Australia's IT sector has rocketed more than 10 per cent as investors bought up software names like Xero and WiseTech.
Their rallies paled in comparison to NextDC's eye-watering 50 per cent surge, erasing last week's delay-related sell-off after Goodman Group and Digital Reality bought up the data centre player in an after-market share raid overnight.
The initial drop had been an over-reaction to a short-term problem, Global X ETFs senior investment strategist Billy Leung said.
"Goodman and Digital Realty build and run data centres for a living, and they know what it costs and how long it takes to get land, power and approvals in Australia today," Mr Leung said.
"And with community opposition making new data centres harder to build every month, the ones already standing are only getting more valuable."
In company news, David Jones has fallen into administration and receivership after 188 years of operation, putting some of its 38 stores at risk of closure.
NAB shares lost more than five per cent to $38.96 after its annual net profit fell for a third straight year.
Looking ahead, Qantas, Nine and Coles will hold annual meetings on Friday.
The Australian dollar is buying 70.09 US cents, up from 69.83 US cents on Wednesday at 5pm.
ON THE ASX:
* The S&P/ASX200 gained 230.6 points, or 2.61 per cent, to 9065.1
* The broader All Ordinaries advanced 250.3 points, or 2.8 per cent, to 9205.2
One Australian dollar trades for:
* 70.09 US cents, from 69.83 US cents on Wednesday at 5pm AEDT
* 110.68 Japanese yen, from 110.36 Japanese yen
* 62.24 euro cents, from 62.15 euro cents
* 51.96 British pence, from 51.88 pence
* 124.26 NZ cents, from 124.61 NZ cents
