US stocks notched up their first back-to-back gains in a fortnight after investors upped their bets on a sooner than expected end to the Iran war. The S&P 500 closed 0.7 per cent higher on Wednesday and the tech-heavy Nasdaq Composite added 1.2 per cent. Both indices on Tuesday jumped by the most in about 10 months. Memory chip stocks fared best, with Micron Technology rising over 8 per cent, while Nike was the biggest faller, down 15 per cent after the retailer provided a gloomy year-ahead outlook.

This market reaction followed US President Trump's statement that he would not consider a ceasefire unless the Strait of Hormuz is reopened. The Strait's status is critical for global oil shipments, and its closure could disrupt 20 per cent of the world's maritime oil trade. Trump's position creates a high-stakes negotiation dynamic with Iran, where any agreement would likely require concessions on regional influence and nuclear program restrictions.

Investors are interpreting the potential ceasefire as a catalyst for economic stability in oil-producing regions, driving risk-on sentiment. The 15 per cent Nike decline reflects broader retail sector caution amid persistent inflation concerns, though the broader market optimism suggests traders are pricing in geopolitical resolution. This week's gains mark a significant shift from August's volatility, highlighting how quickly market sentiment can pivot on geopolitical developments.