Morning Wrap: ASX 200 to rise, S&P 500 futures rally on Iran deal hopes, Oil tumbles 10%

In a nutshell:

• US markets closed for Memorial Day, but US futures higher after Trump said negotiations with Iran over an interim deal is “proceeding nicely”  

• Europe’s STOXX 600 rallied 1% to close within an arms reach of all-time highs, Nikkei 225 and Taiex both closed at record levels 

• Brent settled 10.1% lower to US$93.63 a barrel, a near five-week low

Let's dive in.

• US markets closed for Memorial Day, S&P 500 and Nasdaq futures currently up 0.98% and 1.37% respectively

• UK market closed for the Spring Bank Holiday, thinning trading volumes across the region

• Nikkei soared 2.87% to fresh all-time highs, with an 8.95% three-day gain the steepest in over six years

• European stocks finished near best levels with STOXX 600 up 1.04%, the highest since March 2 and within 1% of February's record high, on US-Iran peace deal optimism

• Banks led STOXX 600 with a ~2% jump on lower bond yields

• German 10-year yield down 10 bps to 2.93%, both near ~1 month lows as easing oil prices softened inflation expectations

• Trump said said negotiations with Iran over an interim deal to extend their ceasefire and reopen the Strait of Hormuz were “proceeding nicely, urged Saudis, Qatar and other countries to join the Abraham Accords (BBG)

• Israeli PM Netanyahu publicly responded for first time, saying Trump assured him Iran's nuclear program will be fully dismantled and enriched uranium removed in any final deal (CNN)

• An Israeli official said emerging US-Iran deal is "bad" because it signals to Tehran that Hormuz is a weapon "no less effective than a nuclear one" (TI)

• Iranian Foreign Ministry spokesman said "a consensus was reached on many topics discussed" but no one can claim signing of an agreement is imminent (TE)

• Draft US-Iran memorandum reportedly includes a 60-day ceasefire extension, Hormuz reopening with Iran clearing mines, gradual lifting of US naval blockade, and unfreezing of Iranian assets (AX)

• European natural gas futures dropped below €49 per megawatt hour, easing from a six-week high as three LNG tankers from the Persian Gulf transited the Strait of Hormuz in recent days (BBG)

• Iran's IRGC Navy claimed 35 vessels passed through the Strait of Hormuz in past 24 hours (up from 26 earlier in the week), though independent tracking suggests actual transits remain far below the pre-war 138/day average (IL)

• Japanese chip stocks surged with Renesas and Rohm gaining ~10% each, SoftBank up over 5%, Tokyo Electron over 3% on lower oil and AI tailwinds (TK

• European airlines rallied on lower fuel costs, with Lufthansa up ~3% and Air France-KLM up ~6% as Brent dropped below US$100 (RT)

• No major headlines as Trump administration focus shifted to Iran negotiations over the long Memorial Day weekend.

• No major headlines, though falling oil prices starting to ease ECB, BoE and Fed hike expectations

• No major economic data releases overnight 

• Infratil FY26 EBITDAF up 11% to NZ$989m vs. $997m ests, proportionate capex up 17% to NZ$2.7bn, final dividend of 13.65 cps, guidance for FY27 EBITDAF to increase 21% at the midpoint (IFT)

• Fisher & Paykel FY26 NPAT up 24% to NZ$468.5m vs. NZ$450-470m guidance and NZ$467m ests, full-year dividend up 22% to 52 cps, FY27 NPAT guidance of NZ$500-550m vs. NZ$538m ests (FPH)

• Strike Energy outgoing chair John Poynton discloses sale of 4.3m shares, beneficially owns 11.9m shares after the selldown (STX)

• Zimplats notes Zimbabwe government has classified certain metals, including platinum group metals as critical metals in new policy (ZIM)

• Coal: A massive rally for local names on Monday (CRN +20.9%, WHC +8.7%, YAL +7.4% etc) after a deadly gas explosion in China's Shanxi province resulted in the suspension of 26 coal mines, totalling ~25.6Mtpa, according to Mysteel. There is no resumption timetable and such post-accident suspensions often trigger state council-level reviews/audits. Will be interesting to see if this drives some continued upside for coal names.

• A quiet one: A relatively quiet overnight lead, given US and UK markets were closed. Some very broad gains out of Europe (ex-energy and telcos), while Asian benchmarks continued to rally on AI enthusiasm. The lower yields, oil price and VIX dynamic should continue to support equity markets, though we know how quickly that can change.

• Adore Beauty downgraded to Hold from Buy; target cut to $0.39 from $1.00 (Bell Potter)

• Graincorp upgraded to Outperform from Neutral; target up to $6.10 from $5.90 (Macquarie)

Stocks trading ex-dividend: 

• Tue 26 May: Elders (ELD) – $0.18, Newmont (NEM) – $0.254

• Wed 27 May: Amcor (AMC) – $0.91, Morphic Ethical Equities Fund (MEC) – $0.01, Webjet Group (WJL) – $0.02

• Thu 28 May: Technology One (TNE) – $0.08

• Fri 29 May: Pengana International Equities (PIA) – $0.014
  

Other ASX corporate actions today:       

• Dividends paid: None

• Earnings: None

• IPOs: Li-FT Power at 1:00 pm 

• AGMs: None

Economic calendar (AEST):

No major economic announcements.