Geopolitical Relief Gives Markets a Lift

• A clear risk-on tone returned overnight, with investors moving back into equities and away from traditional safe havens as concerns around the Middle East eased.
• The biggest move was again in energy markets, where crude oil extended its recent decline. Brent settled at US$83.50, down 4.5%, while WTI fell almost 5% to near US$80, as traders continued to unwind conflict-related pricing.
• Equity markets responded positively to the improving backdrop, with the S&P 500 gaining 1.7%. Bond market moves were more muted, with the US 10-year yield easing to 4.47% and the 2-year yield finishing at 4.07%.
• The focus now shifts back to central banks. Locally, the RBA decision and Governor Bullock’s commentary will dominate attention today, with markets overwhelmingly expecting rates to remain unchanged at 4.35%.
• Offshore, the policy calendar remains busy. A 25bp move from the Bank of Japan is largely priced, while Chinese activity data will provide another read on the strength of growth across the region.