To The Moon

Australia's stock market opened higher on Wednesday as strength in materials stocks helped counter concerns that inflationary pressures from the Iran conflict might prompt the Reserve Bank of Australia to raise interest rates next week.

The S&P/ASX 200 Index advanced 29.90 points, or 0.3 percent, to 8722.50 by 10:15 AM AEDT, with only four of the eleven sectors trading in positive territory.

Oil prices continued their ascent amid volatile market reactions to changing statements from the U.S. administration regarding the Iran conflict and shipping activity in the Strait of Hormuz. West Texas Intermediate crude climbed 5.3 percent to US$87.89.

"The primary concern for markets is the degree to which this supply disruption results in higher inflation, weaker growth, interest rates rising more than anticipated, and reduced corporate profits," said Kyle Rodda, Senior Market Analyst at Capital.com.

On the local bourse, the energy sector edged higher with Woodside Energy gaining 0.2 percent, Santos up 0.7 percent, and Ampol rising 0.7 percent.

Materials were the top-performing sector as BHP climbed 1.1 percent following bargain-hunting activity, while Fortescue added 1 percent. Gold miners also advanced despite stable precious metal prices as traders assessed conflicting U.S. signals on Iran. Northern Star increased 2.2 percent and Newmont gained 1.3 percent.

These gains occurred alongside a surge in the Australian dollar to US71.70¢, its highest level in over three years, while bond yields rose following hawkish remarks from RBA Deputy Governor Andrew Hauser on Tuesday evening. The deputy governor cautioned that insufficient action to control inflation expectations could lead to damaging high inflation that would negatively impact everyone.

The RBA had increased the cash rate by 25 basis points to 3.85 percent last month, marking its first hike in more than two years. Both UBS and Capital Economics brought forward their rate hike expectations to next week, with money markets now pricing in a 62 percent probability of a March 17 increase, up from 39 percent prior to Hauser's comments.

Interest rate-sensitive stocks declined across technology, real estate and retail sectors. WiseTech Global fell 2.7 percent, Goodman Group dropped 0.8 percent and JB Hi-Fi declined 1.1 percent.

Stocks in focus

In corporate developments, Lynas Rare Earths jumped 12.3 percent after extending its long-term supply agreement with Japan Australia Rare Earths through 2038, securing offtake for critical rare earth materials used in Japan. The revised agreement commits JARE to purchase 5,000 tonnes annually of neodymium-praseodymium from Lynas at a market-based floor price of US$110 per kilogram.

GQG Partners declined 5.5 percent despite reporting growth in assets under management to US$172.9 billion ($242.9 billion) at February's end, driven by strong investment performance even as outflows continued.

Macquarie Technology Group advanced 2 percent after securing a $200 million hybrid investment from the National Reconstruction Fund Corporation to support expansion of sovereign digital infrastructure and cybersecurity services.