Wall Street closes higher despite early losses
The S&P/ASX 200 futures rose 62 points or 0.73% by 8:40 am AEST. Wall Street closed higher overnight, with the S&P 500 gaining 0.96% after falling as much as 0.41% earlier. Market sentiment turned positive as traders dismissed fears of broader Middle East escalation.
Limited fallout from US-Iran conflict boosts sentiment
Wall Street rallied after the US military launched airstrikes on three Iranian nuclear sites over the weekend. The market welcomed the limited Iranian response. Iran’s counterattack on US bases failed to escalate regional tensions further. Brent crude dropped 8.8% to US$70.33 a barrel, the lowest since 12 June. The decline suggested markets overestimated supply threats in the Strait of Hormuz. Crude’s correction erased the risk premium tied to the conflict.
Fed officials flag July rate cut possibility
Investor optimism also grew after US Federal Reserve Governor Michelle Bowman hinted at a July rate cut. Bowman stated, “It may be appropriate to cut rates as soon as next month if inflation remains around current levels or trends lower.” The remark echoed Fed Governor Christopher Waller, who also indicated support for a potential July rate cut.
Historical trends show market resilience to geopolitical shocks
Deutsche Bank reported that past geopolitical shocks dragged the S&P 500 down 6% over three weeks on average. However, markets typically recovered all losses in the next three weeks. Morgan Stanley said short-term volatility from such events rarely altered long-term performance. On average, the S&P 500 rose 2% after one month, 3% after three months and 9% after twelve months.
Historical data shows that the S&P/ASX 200 tends to ignore major geopolitical events
Metcash FY25 results land at top end of guidance
Metcash released its FY25 results on Monday, meeting or beating its 10 June guidance. Revenue rose 8.9% to $17.3 billion. Underlying EBIT increased 2.3% to $507.8 million, compared to guidance of $504–508 million. Underlying profit after tax fell 2.4% to $275.5 million, within the $273–277 million range. Metcash declared a final dividend of 9.5 cents per share, beating UBS forecasts by 6.7%. The Food and Liquor divisions performed strongly, while Hardware showed early signs of recovery. FY26 numbers for May–June reflected continued Food momentum and stabilised Hardware sales. UBS maintained a Buy rating, raising its target price to $4.25 from $4.00. Jarden also retained Overweight and lifted its target to $4.10 from $4.00.
Fletcher Building shares slump on weak FY25 guidance
Fletcher Building forecast FY25 EBIT before significant items between $370 million and $375 million. The midpoint guidance of $372.5 million fell 5% below Citi’s estimate of $392.1 million. CEO Andrew Reding stated, “We expect FY25 EBIT (before Significant Items) to be in the range of $370 million to $375 million inclusive of the $16.4 million loss incurred as a consequence of the settlement reached with NZTA.” Fletcher Building shares dropped 5.1% to NZ$2.92, marking their lowest point since 5 February.
Trump claims Iran-Israel ceasefire agreement reached
Former US President Donald Trump declared on Truth Social: “CONGRATULATIONS TO EVERYONE! It has been fully agreed by and between Israel and Iran that there will be a Complete and Total CEASEFIRE (in approximately 6 hours from now, when Israel and Iran have wound down and completed their in progress, final missions!), for 12 hours, at which point the War will be considered, ENDED!” Bloomberg reported that neither Iran nor Israel had commented. Early Tuesday trading saw commodities fall. Gold slipped 0.43% to US$3,352 per ounce. WTI crude plunged 3.87% to US$64.64 per barrel.
Collins Foods beats expectations in FY25
Collins Foods, operator of KFC stores, posted a softer FY25 but exceeded expectations. Revenue rose 2.1% to $1.52 billion, in-line with Macquarie estimates. Underlying EBITDA came in flat at $228.5 million, beating forecasts by 4.1%. Underlying NPAT dropped 14.8% to $51.1 million, a 15.3% beat. The company declared a fully franked final dividend of 15 cents per share, 47% above estimates. Total FY25 dividend was 26 cents per share, down 7.1% year-on-year at a payout ratio of 59.9%. CEO Xavier Simonet said, “Encouragingly, tax cuts and lower interest rates are beginning to support improvements in consumer sentiment.” He added, “Growing sales, deflation in key input costs in Australia, and operational efficiency gains assisted in delivering a stronger H2 performance.” Collins noted record short interest of 4.49%, up from 0.8% in December.
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Strong early FY26 growth for Collins Foods
KFC total sales in the first weeks of FY26 rose 4.9% in Australia, 2.6% in the Netherlands and 2.4% in Germany. Same-store sales increased 1.6% in Australia, dropped 0.2% in the Netherlands, and rose 1.3% in Germany. The company targets low-to-mid-teens NPAT growth in FY26, compared to Macquarie’s estimate of 25.3%.
Energy stocks hit by oil selloff
Oil prices fell sharply overnight, dragging energy stocks lower. Brent crude fell nearly 10% from US$78.07 to US$70.33 since 4:00 pm AEST Monday. In pre-market trade, Woodside shares dropped 3.29%, Beach Energy fell 2.55%, and Karoon Energy slid 4.78%.
Veris forecasts return to profit
Veris expects FY25 net profit before tax between $1.8 million and $2.0 million, reversing a FY24 loss of $4.4 million. The spatial data provider operates across infrastructure, resources, utilities, government and defence sectors. Veris may declare an FY25 dividend and continues its share buyback program. The Board noted significant value at current share levels.
Gold prices retreat on de-escalation hopes
Gold prices fell 0.60% to US$2,646 per ounce early Tuesday. Investors reacted to easing geopolitical tensions. Markets viewed the US airstrikes and Iran’s response as limited in scale. Trump’s ceasefire post between Iran and Israel also influenced the decline.
Collins Foods shares surge on result and short squeeze
Collins Foods shares jumped 24% after reporting better-than-expected FY25 results. The announcement also triggered a short squeeze. The stock erased a 12-month drawdown of around 15%. Collins reported higher revenue, EBITDA, NPAT and dividends than anticipated.
