ASX 200 Outlook: Rally Builds but Hormuz Risks Cloud the Outlook

Appetite for risk picked up on Tuesday as traders reacted to headlines suggesting the conflict with Iran could be nearing a turning point. Reports indicated Trump had told aides he was considering scaling back military action — even if the Strait of Hormuz remained closed. Bloomberg also noted that Iran’s state-run news agency (IRNA) reported its president is willing to end the war with the US.

However, details remain scarce and the messaging is far from consistent. Oil prices are still elevated, with Trump also suggesting other countries could reopen the Strait of Hormuz — a reminder that supply risks remain firmly in play.

If the US were to step back without restoring flows through Hormuz, the most likely outcome is persistently higher oil prices and renewed inflation pressures — a scenario markets may not be fully pricing.

For now, the shift in sentiment has lifted global equities, putting the ASX 200 cash market on watch for a strong gap higher.

View related analysis:

ASX 200 Rally Faces Oil Risks as SPI 200 Signals Strong Open

ASX 200 Market Snapshot

The ASX 200 cash index snapped a 3-day losing streak, though only just with a 0.25% gain, printing an indecision day (doji)
However, SPI 200 (ASX 200 futures) are up 1.5%, pointing to a strong gap higher for stocks today
Implied volatility over the next 30 days remains elevated, and we’ve seen the average daily range (ADR) expand on Mondays due to weekend headlines from the Middle East before trending lower throughout the week
Perhaps not surprisingly, the ASX energy sector (XEJ) has been the strongest performer in March, driven by a surge in crude oil prices
Materials (XMJ), industrials (XIJ), and technology (XTJ) have been the weakest ASX sectors in March

Source: ASX, LSEG

ASX 200 Technical Analysis

Options Positioning Signals Shift to Higher Range

Options positioning suggests the ASX 200 has shifted into a higher trading range after breaking above previous resistance. The 8475 level has flipped into a pivot, where price may find support on pullbacks. Above, 8500–8600 marks the key resistance zone, where rallies may begin to slow. On the downside, 8400 remains the main support level, where buyers may step back in if tested.

Ultimately, the market has turned more constructive, with dips likely to be bought while price holds above 8475, but rallies may start to stall near 8500–8600.

SPI 200 (ASX 200) Technical Outlook

Momentum has clearly turned higher, with ASX futures now back above 8600. However, there is a notable zone of resistance around 8700, including the 200-bar EMA on the 4-hour chart, the monthly pivot point, and the weekly R1 pivot. Bulls will likely attempt to test this resistance zone today, although a sustained break above it may depend on whether we see genuinely positive developments from the Middle East and if ASX 200 cash prices can hold above the 8600 level. Otherwise, the risk of a pullback from 8700 remains elevated.

Ultimately, if Trump exits the war without reopening the Strait of Hormuz, it is difficult to see how any rally could be sustained given the potential inflationary shock that may follow.

Source: ASX, ASX24, TradingView

View the full economic calendar

-- Written by Matt Simpson

Follow Matt on Twitter @cLeverEdge

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