ASX Rebounds on Trump’s Iran Comments: Three Reasons Not to Buy This Rally Yet

ASX Bounce Looks Fragile Despite Trump’s Iran Remarks

The ASX 200 climbed 1.1% to close at 8,692.6 on Tuesday after US President Donald Trump told CBS News he believed the Iran conflict was “very complete, pretty much,” sparking a wave of relief buying across the broader market. The big four banks led the charge, each advancing between 2.0% and 2.1%, while energy stocks fell sharply on the same day. That contradiction tells investors a great deal. We believe this looks more like a relief rally than a genuine recovery, and the risk of chasing it higher is real.

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Reason 1: The Iran War Is Not Over, Just Reframed

Trump’s comments were optimistic, but they were not conclusive. A single presidential statement on CBS News does not end a shooting war, and the conflict between the US, Israel, and Iran remains active on the ground. The clearest evidence of this is oil itself. WTI crude surged as high as US$119.48 per barrel on Monday before plunging back to around US$85 to US$86 after Trump’s remarks, one of the largest single-day intraday swings on record.

The Strait of Hormuz remains extremely high-risk, with major commercial insurers withdrawing coverage and Western shipping firms, including Maersk and Hapag-Lloyd, avoiding the waterway entirely. Only shadow fleet and Chinese-flagged vessels are transiting, keeping global supply lines severely disrupted. For ASX investors, elevated oil prices feed directly into inflation, which pushes interest rate cuts further away and squeezes consumer spending.

Reason 2: The Macro Picture Was Already Weakening Before Iran

Before Iran dominated the headlines, the ASX was already under pressure. The market fell 3.8% in the week ending Friday, March 6, its steepest weekly decline since mid-June 2022. The RBA delivered a rate hike in February, and NAB’s Business Confidence survey fell to -1 in February from 4 the prior month, its first negative reading in 11 months.

Adding to the concern was a belated but jarring US jobs report, delayed by a month due to the 2025 federal government shutdown, which showed losses across the federal government, manufacturing, and healthcare. Iran gave investors a clear trigger to sell, but the underlying conditions that were already making them nervous have not changed. This bounce is masking those concerns rather than resolving them, and we think that distinction matters enormously for anyone considering adding risk right now.

Reason 3: The Bounce Is Being Led by the Wrong Stocks

The most telling signal on Tuesday was that energy stocks fell sharply even as the broader index recovered. Woodside Energy dropped 3.6%, and Santos fell 3.2% on a day the market was supposedly celebrating the potential end of an oil war. If investors genuinely believed the Iran situation was winding down, energy producers should have surged alongside everything else. Instead, they dropped, which tells you conviction in this rally is shallow. Meanwhile, bank stocks doing the heavy lifting were already trading near record highs before Monday’s sell-off. CBA (ASX: CBA), NAB (ASX: NAB), Westpac (ASX: WBC) and ANZ (ASX: ANZ) bouncing back to stretched valuations is not the same as finding genuine value. In our view, smart money tends to rotate out of expensive positions on relief rallies, not recommit to them.

The Investor Takeaway

For investors assessing their next move, we believe the risk-reward is not compelling at current levels. Banks appear fully priced even after the recent pullback, and the macro backdrop, a February rate hike, soft business confidence, and a delayed but weak jobs report, has not improved enough to justify re-entering aggressively. Energy stocks carry ongoing geopolitical uncertainty, though quality ASX producers with strong balance sheets and low cost structures remain worth watching if oil stabilises around the US$85 to US$90 range.

Defensive sectors such as healthcare and infrastructure, which held up relatively well during the sell-off, may offer more attractive entry points given their earnings visibility. The safest approach right now is patience. Wait for oil to settle, the Iran situation to genuinely resolve, and valuations to reflect the macro reality before adding meaningful new exposure.