ASX restores $55b in value after 1.9pc rally; DroneShield surges 20pc

The Australian sharemarket restored $55 billion in value on Wednesday in its biggest gain in six weeks, bolstered by US diplomatic efforts to end the conflict in the Middle East and softer local inflation data.

The S&P/ASX 200 Index jumped 1.9 per cent, or 154.90 points, at 8534.30, the most since February 9, as investors piled back into the beaten-down stocks that until today had erased about $300 billion from the gauge since the Iran war started.

The market responded to a 5 per cent plunge in the Brent crude to $US99.28 in Asian trading and a rebound in gold as optimism strengthened around Washington’s push to end the conflict.

Trump signalled that Iran had offered a “present” as a show of good faith in negotiations related to the reopening of the Strait of Hormuz, while Axios reported that the US and regional mediators were discussing the possibility of holding high-level peace talks as soon as Thursday.

IG market analyst Tony Sycamore said there was a “bit more substance behind” Wednesday’s rally which is why the sharemarket held on to its gains into the close.

“The reality is that we can have talks, but talks are cheap – we’ve got to have action to open the Strait of Hormuz before markets will begin to even feel an ounce of ease,” he added.

Stocks were also supported by February inflation data which came in lower than expected at 3.7 per cent. That prompted bond traders to ease their rate rise bets to around a 50 per cent chance for May.

On the ASX, the beaten-up materials sector rallied 4.4 per cent – the biggest one-day gain since April 2025 – buoyed by a 2.1 per cent jump in gold to $US4571.41 an ounce. Newmont surged 8.9 per cent to $149.23, Northern Star 7 per cent to $18.80, and Bellevue Gold 11.1 per cent to $1.40.

Retailers were also higher. Eagers Automotive rallied 5.6 per cent to $22.83 on expectations that more motorists would look to buy electric vehicles, while JB Hi-Fi added 2.6 per cent to $75.59. DroneShield rocketed 19.3 per cent to $4.26 as investors continued to trade on the conflict.

Energy stocks declined with the oil price as investors started to take some profits. Woodside Energy fell 3.2 per cent to $33.62, Santos 2.3 per cent to $7.66 and Karoon Energy tumbled 7.3 per cent to $1.91.

Stocks in focus

In corporate news, mining giant Rio Tinto is set to receive $2 billion in taxpayer subsidies to secure the long-term future of its massive Boyne aluminium smelter in North Queensland. The shares rose 1.6 per cent to $149.91.

Alliance Aviation surged 27.4 per cent to 67.5¢ as it reassured investors it had limited direct exposure to higher fuel prices, saying that under wet lease arrangements with airlines including Virgin Australia and Qantas that its customers bear fuel costs.

Pepper Money added 5.4 per cent to $1.77 after it ended takeover talks with Challenger after rejecting a $2.25 per share proposal. Challenger climbed 3.7 per cent to $8.21.

Amplitude Energy crashed 36.7 per cent to $1.69 after it said its Isabella gas discovery in the offshore Otway Basin was deemed non-commercial following flow test results and it would plug and abandon the well.

And 4DMedical rocketed 34.6 per cent to $6.23 as it secured a deployment of its CT:VQ ventilation and perfusion imaging technology at Mayo Clinic, expanding its footprint across leading US academic medical centres.