Matt Simpson

If we cut through the noise of the past week, traders still appear hopeful that a ceasefire can hold or that a broader deal can be reached. Risk assets rallied on the announcement of last week’s ceasefire, yet sentiment has largely held up despite it being quickly annulled. Wall Street indices have climbed to a five-week high, with the ASX 200 tagging along for the move. Bitcoin is at a 4-week high – the digital proxy to Wall Street.

ASX 200 futures rebounded overnight alongside Wall Street, fully retracing Monday’s losses and pushing back into key resistance levels. While the broader trend is attempting to stabilise, rising volatility and headline-driven flows suggest the rally may lack conviction. Correlations show the index is behaving like a classic risk asset again—tracking global equities and AUD/USD—though short-term moves remain reactive rather than directional.

The US and Iran agreed to a temporary, conditional ceasefire on Tuesday, prompting the Australian dollar to lead the risk-on rally for FX on what is now dubbed Trumps’ Taco Tuesday. Appetite for risk is on a tear following President Trump’s decision to delay the bombing of Iran by two weeks, allowing more time for talks.