Diplomacy and Headlines Drive Sentiment

• Markets took some comfort overnight as discussions between the US and Iran continued to progress around extending the ceasefire and reopening the Strait of Hormuz. More than 30 vessels reportedly moved through the waterway over the past 24 hours, including LNG tankers.

• Broader market sentiment has remained constructive despite President Trump hardening his rhetoric, saying he will only settle for a “great deal or no deal at all” regarding Iran.

• Oil markets reacted sharply, with optimism building around improved supply conditions should the Strait continue reopening. Note liquidity was thinner than usual due to the US Memorial Day holiday.

• Brent crude fell 7.2% to US$96.14, while WTI traded near US$90.30, down 6.5%, as geopolitical risk concerns eased.

• Locally, Australian 10-year government yields held around 4.90%, while markets continue to price only around a 10% chance of an RBA move in June, leaving expectations anchored near the current 4.35% cash rate.